It's no secret that interest rates are on the rise. What does this mean if you're considering investing in real estate? Real estate is a typical investment for doctors and well-earning professionals because of the value and tax benefits. In this post, we will go over what to look out for with rising interest rates so you can get the most value out of your dollar!

According to Redfin, 14.9% of buyers backed out of home purchases due to rising interest rates. Loans are becoming more expensive, changing the climate of the real estate market.

Doctors investing in real estate

As a doctor, you may now be able to expand your investments into new opportunities. Real estate has been a long-standing investment that provides more stability than stocks. It remains a popular investment for doctors because it offers the potential for high returns and appreciation over time.

Additionally, real estate has many creative opportunities, from passive investments such as DSTs to more active investments, like flipping, vacation, and rental properties. The state of the market influences which of these is the more lucrative option.

The beauty of real estate is that homes are always in need. What changes is if it's a buying market or a rental market. With interest on the rise, flipping has become less lucrative. The more expensive loans are slowing the buying market and giving buyers more room to negotiate.

Rising interest rates

However, there is still a housing shortage, providing lucrative investment opportunities for new construction and rental properties.

Whether now is a good time to buy depends upon your goals. Are you looking for a property you can live in for a while or one you can flip for a profit? If you're looking to buy and hold, the current interest rates may not have as big of an impact on your decision.

Though interest has recently increased, it remains lower than historical rates from the 70s through the 00s. It averaged 6-8% during this time and peaked in the 80s at 18%. So buying now may still be advantageous to lock in lower rates. Additionally, carrying mortgage debt can help offset your tax burden.

We have been enjoying low rates for the past ten years, and the current rise is deterring home buying. The market is now less competitive, causing home prices to settle.

Housing Shortage

More rentals are needed with a housing shortage and loans becoming more expensive. A simple benchmark for finding a lucrative rental home investment is the 1% rule. If a home has a $200,000 purchase price, then the monthly rent should be around $2000. Of course, this rule isn't to live and die by but can help you scan markets for profitability.

More Real Estate Investing Opportunities for Doctors

Your goals and involvement are two significant factors in deciding if real estate investing in today's market is worth the value. For more information on real estate investing, check out Is Now a Good Time and Passive Real Estate Investing Opportunities. If you have further questions or are interested in financial planning in Punta Gorda Fl or Miami, don't hesitate to