If you have been considering purchasing an investment or rental property I would suggest you do it sooner rather than later for a couple of reasons. First interest rates will eventually start to rise making the borrowing costs more expensive and that will directly effect your cash flow. With the mounting national debt and out of control spending the current administration is budgeting; it will be when, not if, interest rates will rise. There are several reasons why this will happen, one is we continue to grow the national debt at an unprecedented rate and with the addition of the health care nightmare it add trillions to our debt. Just as when an individual person starting acquiring more and more credit card debt your credit score will go down and the costs of borrowing money increases, so will be the case with our country and consumers. Currently the government purchases a large amount of federally backed securities and notes which keep our interest rates artificially low. Unfortunately our government is using borrowed money to buy this securities mostly borrowed from China and with our national credit rating dropping because of our debt crisis it will just be a matter of time before them want higher returns on these securities. That will in turn increase our costs and that will eventually get pasted on to the consumer, hence my statement higher interest rates are in the future and my guess is not the distant future. The second reason we will have higher interest rates, is the government continues to print money again at an unprecedented rate which will lead to the devaluation of the dollar on the monetary markets and again interest rates will rise as the value of the dollar decreases. Just as a note – anytime you hear the “Treasury Department” in the news, think of a printing press as they are one in the same. So when you hear the Treasury Department is going to increase the money supply or increase our debt ceiling, it is firing up the printing presses to print more money to pay for our ever increasing national debt. Actually I digress and didn’t mean to include an economics lesson in this blog; but you should know my reasoning as to why I am saying interest rates will rise in the near future and if you are going to purchase a rental property now may be the time. For more information on managing rental properties visit my website at www.managementofrentals.com and follow my blog.
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