ContributorVoices Real estate investing is inherently an industry full of uncertainties. This is even more apparent now than ever. But experience lends itself to qualified predictions, and seeds of uncertainty can grow to future success if we can prepare and educate ourselves. We asked several experienced investors and Think Realty contributors this tough question: “How do you think the national quarantine crisis this spring and recent 0% interest rates will affect the real estate investment industry?”

I do think that people should be looking to refinance or by income producing properties at this time. With cheaper rates comes the long-term arbitrage of our money being worth a lot less in the future than it is worth today meaning you’re basically paying less for the property than it’s worth. However, understand that as the Fed rate goes down, mortgage rates do not always fall in line and when they do, it is not done immediately. I do see Fannie Mae rates dipping below 4%, but I don’t think they will go much lower than that.

I think the reduction of interest rates to 0% shows a certain tone deafness by the government to the issue. Access or expense to capital is not the current issue, the problem is access to labor, which is not a factor of interest rates. If people cannot go to work, companies cannot produce, even with interest rates at 0%. My fear is that employers will borrow at this rate to keep themselves afloat, but ultimately will not be able to pay back the principle if the work stoppage continues.

The recent Fed rate cut has created more confusion than anything for the Real Estate world recently. Many seeking to leverage have been holding out for this day anticipating to borrow money for nothing when the Fed zeros out the rate only to be disappointed that long term rates have increased. I encourage many to understand the Mortgage Backed Security (MBS) to know what drives long term rates. Not the Fed, not the 10-year treasury. Seek to under- stand the MBS.

TOM OLSON GoodSuccess

AARON CHAPMAN SecurityNational Mortgage

SUSAN NAFTULIN Rehab Financial

12 | think realty magazine :: may 2020

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