We hope everyone is enjoying their fall, had a happy Halloween and is ready for stores to start promoting Christmas in Early November. It feels like we just started the year and here we are talking about Christmas. We’ve had quite a 2018 thus far and it still isn’t over yet. For those who come to our monthly meetups, if you are not members of VPI, we charge $25-$30 for our monthly meetup events. Feel free to check out our website on becoming a member ($29.95/Month or $299/year). We wanted to ensure we are among the lowest costs out there (in all honesty we do not want to charge at all). Charging a modest fee allows us to know we are working with those that are vested in taking the next step in their real estate investing journey and will be accountable for taking their own action steps.
Now on to this week’s subject…Interest Rates. Think back to September 2017 when the government raised interest rates for the fist time in 4 years, there was panic, and uproar, and then a few months later the stress test on mortgage qualification was introduced. In total since then, there have been 5 rate hikes. With all of this, it has been more difficult to get mortgages and we have experienced a softened and fairly balanced real estate market for much of the Golden Horseshoe. See the historical graph below on Canada’s base rate since prior to 1995, the last 5 rate hikes hardly moved the needle, the key question to ask is, do think real estate investors stopped buying during high interest rate times?
5 rate hikes = 1.25% higher mortgage interest payments and its harder to qualify for mortgages with the stress test. Since the spring of 2017 we have had Ontario’s fair housing plan on top of all these other changes. Although we did have a correction for much of Mid 2017, for the most part real estate prices have been stable and balanced for over a year. With all of these forces attempting to push prices down, they have still maintained. Check out our previous blog “Why is the Golden Horseshoe such a great Place to Invest” for more information on the long-term trends and why we believe this may be among the best investment regions on earth, and is still poised for long-term future growth.
As Investors it is sometimes difficult to ignore interest rate hikes, and home price appreciation. If we only looked at home prices or interest rate hikes, we would likely never purchase a property after the first. The reality is Investors have been purchasing sound investments when interest rates were greater than 15%, when prices were appreciating greater than 10% and when home prices were decreasing at 10% a year. The key to real estate investment is to look at all variables rather than only one in isolation, and to also purchase solid properties that provide cash flow month-in-month out regardless of market cycles.
We have said many times that it will likely be next to impossible for our children and future generations to purchase homes/properties themselves. With the shrinking middle class, the Golden Horseshoe is on its way to becoming a rental market over the next several decades, and It is the land & property owners who benefit during this time.
Visit us at www.VenturePropertyInvestments.com and our pages on facebook or LinkedIn to learn more about how we invest in real estate to profit in both an increasing or decreasing housing market. Or contact us if you would like to learn how we are providing double digit returns for our partner’s and clients year over year.
Until Next Time,
Build Wealth. Live Life
If you haven’t come out to one of our events, feel free to visit our events page on our site at https://venturepropertyinvestments.com/events/. If you are just starting out, or a seasoned pro, come out to Learn and Network with others like you.
Martin Kuev & Chris Shebib are full time Real Estate Investors, Realtors and Wealth Coaches who have over 20 years experience in Real Estate. With multi-million-dollar real estate portfolios and a team built over the past decade, they left the corporate world to have the flexibility to spend time with family, continue their own real estate investments and help others build long-term wealth.
Both Chris & Martin are first and foremost Husbands, and Fathers. Both are actively involved with their families and each have 3 daughters keeping home life full of surprises.