The year is off to a decent start–the fears many investors had that mortgage rates will go up very quickly due to the Fed’s raising the short-term rates recently have not only not materialized, but actually, mortgage rates have gone down twice. I will address it in a separate blog entry but as you can see there is no immediate correlation. Needless to say, mortgage interest rates WILL go up at some point which in part serves to frame the most important aspect of 2016.
During 2016 mortgage interest rates are likely to remain quite low for the entire (or most of the ) year. As single-family homes investors, those of you with decent credit and not a huge portfolio can still qualify and get these coveted 30-year fixed rate loans that you can only get on Single Family Homes (technically 1-4 residential units).
This is the year to focus and be effective in buying solid homes financed by these 30-year fixed rate loans at these incredible interest rates and lock them forever. You will feel like a genius later on after rates have climbed and here you are with an under-5% loan fixed forever, and never changing with the cost of inflation. In a continuous manner, inflation erodes your fixed loan, and the tenant is paying it off one little month at a time.
Do this in 2016. Do this several times. You will be setting up your financial future.
As far as markets, there may not be large appreciation swings in most markets during 2016. In a funny way, the ever-solid Texas is appreciating decently now, but people have some questions about its overall economy.
Oklahoma City with brand-new homes (under 50% of the property tax bite of Texas; it is poised to provide better cash flow on similar rents and home prices – which it has) is a very serious candidate for solid investments.
Jacksonville, Florida is the market least appreciated in the state so far and carries the best appreciation potential. Also in 2016, the Panama Canal project is slated to be finished, potentially generating major large-ship traffic into the Jacksonville port. Will they finish this gargantuan project on time? Will it drift over to 2017? Regardless, it is a dominant event.
Get those good single-family homes and finance them with low 30-year fixed-rate loans. Rinse and repeat. You will very likely be quite happy in the future when you look back at what you have done. We will be discussing this in detail, along with market teams and incredible experts, during our next quarterly 1-Day Expo near SFO on Saturday, March 5th. Everyone citing this blog can attend for free with guests. Just email us at info@icgre.com or call us at 415-927-7504.
