There is an old lesion in real estate industry that if the property does not have a cash flow, it is not a deal. In fact, in a real estate business, the availability and the cost of debt capital determine the health and the well being of the investors. As an investor, there is just one thing you need to survive in any market ?you must have an access to reasonably priced financing. Now that gas prices are at record levels and spending is still strong. It seems like we are heading for another recession. Federal Reserve has tightened the belt, and interest rates are heading upwards. The stocks market seems like falling down with no bottom in sight ?the big question is how should we plan for the next five or ten years. Should we rush for the exit like many other investors? The answer is a straight no. The fundamentals of real estate investments are so sound that we do not need to rush for the exit. We just need to understand whether this doom and gloom cry is based on some truth or just on myths. The following explanation will let you understand what the reality is.

Real Estate Investing in a Rising-Rate Market: The Gloom and Doom Reports in the Media
Media does not have a great knowledge about how real estate industry works. They simply publish trends and not facts. When you will closely examine what media have reported, you will find that such reports indeed do not predict anything. It just shoes us a general trend of where the market has been. After all, just by watching the stocks market, nobody can determine exactly where the economy is heading. 

Real Estate Investing in a Rising-Rate Market: Thing to Remember
However, we cannot deny the fact that the present tech-stocks fallout is another indication that the market does perceive the risks to outweigh the potential rewards. Overall, in this rising-rate market, there are certain things that the investors must take care of. 

Money Is Always Available for Deals That Make Sense
A real estate investor must remember the thing that rising rates, in general, do not make a strong deal weak. Let me explain this. Money is a thing that despises instability and uncertainty, and it really does not care who its owner is. Since stocks carry risks, money moves into low-risk investments when things get dicey. This results in falling price of stocks. In this case, some Government bonds are safe and liquid. Their prices rise, and with the rising price, the yield drops. Such yield works as an index for the interest rate charged for many commercial and residential mortgage loans, and the amount of interest over this index rate is known as spread. Now, here is a lesson learnt from our recent past. 

When the prices of Government bonds were soaring high and there was a major drop in yield, lenders who had millions and millions of dollars committed at spreads were funding these commitments at interest rates below their cost of funds. See the peculiar nature of money ?after six months, the market readjusted to the new paradigm and spreads came back to manageable levels. The inefficiencies in the real estate market were corrected, and when market regained certainty and stability, money flow resumed. Therefore, the magic words are ?you must always follow the money in order to survive in the real estate market, whatever the circumstances are.

Hence, as you can see there are certain things that control the real estate industry. Global financial hiccups and market swings does not make your strong deal weak, or a weak deal undoable. If a deal is really a deal, you can easily fund it and gain profit from it.

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