Some economists are talking about significant inflation coming our way within the next 2 to 5 years. I think that kind of talk should be taken seriously by anyone holding real estate. One has to plan now to position himself/herself in such a way as to avoid potentially catastrophic problems, while preparing to benefit from the situation. Remember, inflation can be your friend if you own real estate. Subsequent to an economic downturn, precipitated by inflation and high interest rates, real estate values will likely spike up. The trick is to be able to weather the high interest rates and the tough economic times and come out smelling of roses at the other end. Here are my recommendations:
1. Tie up low mortgage rates now for at least seven to ten years. Remember the last time we had galloping inflation? Mortgage rates hit record highs. Avoid a situation where you are faced with a mortgage renewal at double the rate or more.
2. Rental property owners should plan ahead, by avoiding short term leases. When rates are high, the economy slows and vacancies rise. You don't want to find yourself in an economic downturn with tenant(s) down-sizing, moving out or closing shop.
3. Many property owners are now securing shorter term mortgages at historically low rates. If mortgage rates rise dramatically as a result of high inflation, those property owners may be forced to sell at low prices or get foreclosed on (here we go again). So, plan ahead for a second round of cheap properties to pick up.
Please add your comments or criticisms. The more heads we can put together, the more clearly we can look into the future.
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Caroline Southwell, REALTOR®, GRI, SRS, RSPS, SFR, Principle Member. Coastal Lifestyles Realty LLC, is an independently owned and operated real estate company. As an Independent REALTOR® and real estate consultant I partner with residential home buyers and sellers throughout the greater Tampa Bay areas of Florida, managing residential real estate transactions selling Homes for Florida Coastal Lifestyles. Areas of expertise include but not limited to St. Petersburg, St. Pete Beach, Clearwater, Palm Harbor, Oldsmar, Tampa, South Tampa, Bradenton in Pinellas County, Hillsborough County and Manatee County.