Is it time to put our head in the sand and wait?

In the last few months, mortgage rates have gone up like crazy. They went up a fourth time last week.?Unprecedented.?This is the biggest change in interest rates in years! And it happened over only 7 months!

?In most of our properties, this has resulted in our debt payment?DOUBLING. We care about interest rates, because when we put together a capital stack, a big chunk of the capital is the loan. The debt service on that is determined by the interest rate, which is very important to your bottom line and cash flow.

?What’s unprecedented about these hikes is that it happened fast, happened multiple times, and the market hasn’t had time to adjust to it, resulting in minimal and even negative cashflows.

?This is a sledge hammer that the federal reserve is taking to what they perceive to be “red hot, out of control inflation”.

?No one has a crystal ball.?It would have been impossible for anyone to predict this?scenario.?Despite multiple “what if” scenarios that we play out when we are underwriting a deal, we couldn’t have predicted all the factors affecting today's economy such as: the credit markets, the federal reserve, inflation, energy costs going up, and supply chain disruptions.

?The good news is that real estate is cyclical. We are currently in a down cycle. There are less sellers, less buyers, and the debt market is unstable because lenders are hesitant to lend!

So, is it time to sell and get out? Is it time to put our head in the sand and wait?

?NO!

The cycle is neither bad nor good…it just is. For current real estate portfolios it requires pivots in strategy?and requires the courage to keep going!?No, you shouldn't sit this one out.

The truth is that a recession brings?HUGE?opportunities for those who can overcome their fear and prepare to take action!

Cap rates are expanding and real estate is at a discount. Debt is expensive but?real estate?prices are coming down! I'm seeing prices go down by several millions!

As long as the deal makes sense financially, you can bake in the interest rates.

Remember, interest rates go up and they go down. They won't stay up forever, they?will?come down.

We just need to make sure we are able to?play a longer game?and?ride it out.

?Exciting things are coming.?Let's get ready to go?bargain shopping!?

Dr. Ronnie Shalev is a board-certified emergency physician, real estate investor, and entrepreneur. She is the co-founder of Shalwin Properties and has built a real estate portfolio of over 5,100 units with $178M in assets under management. She has been featured in Business Insider, MarketWatch, The American Reporter, and multiple podcasts.

To connect with her and schedule your FREE strategy call, go to Calendly.com/shalwinproperties so you can start living the life you’ve been dreaming of today.