How Smart Investors Take Advantage of Low Interest Rates

Q: Gerald, how can I make the most of today’s low interest rates?  Nirav, Somerville, MA

A: That’s a great question, Nirav.  One obvious way to take advantage of historically low rates is by purchasing real estate with a fixed rate mortgage.  Nobody knows how interest rates will change in the future, but locking in a long-term mortgage at a low fixed rate is normally a smart move if you can afford the payments particularly if mortgage rates go up in the future.

A less obvious effect of a low interest rate environment that truly savvy real estate investors recognize is that low interest rates often result in there being a lot of unemployed capital sitting on the sidelines looking for a place to park to earn a higher rate of return.  This sidelined, frustrated capital creates an opportunity for smart real estate investors to attract and raise money from private lenders to fund their real estate deals by offering them a much higher rate of return than they could realistically earn in today’s low interest rate environment.

Thanks for your question, Nirav.  Good luck!

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