Low Rates Make Real Estate Investing and Airbnb Rentals More Viable

February 12, 2021
Last updated:
April 26, 2022
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Regardless of whether you are purchasing your first house, buying a second/vacation home, or investing in lucrative real estate ventures such as an Airbnb, low interest rates make the acquisition more affordable. But rates are on the rise. So, is now still a good time to invest in real estate?

Mortgage rates have been historically low over recent years. But as we make our way through 2022, it is clear that mortgage rates are much higher than they have been, and may continue to increase throughout the remainder of the year. 

What does this mean for first-time buyers, seasoned buyers, and even those looking to refinance? And what about individuals looking to invest in real estate, especially those currently looking at potential Airbnb prospects?

What Do Today’s Rates Mean For Those Looking To Invest In Airbnb Properties?

Looking specifically at Airbnb rentals, the market remains very robust. As a result, if you are thinking about purchasing a second home solely for the purpose of breaking into this market, your best best is to try to secure a lower mortgage rate to help you increase your bottom line. 

Typically, high-end vacation Airbnb homes can go for anywhere from $200 to $2,000+ a night. Moreover, most of these properties have a minimum night’s stay, which means you could have enough to cover your mortgage payment in no time at all; and coupled with a competitive mortgage rate, you are likely to see more profits versus overhead.

Ways to Profit From Real Estate Investments

Adaptive reuse is the process of converting or redeveloping unwanted real estate into a different type of real estate that better serves current and future market demand. Not only will adaptive reuse save many commercial investors, but it will also open new avenues for real estate investors in general.

Of course, it is important to note that much of the value that comes from investing in real estate happens in the long term, i.e., holding property and letting time grow your investment. So, if you are looking to make a short-term investment right now, you might end up slightly disappointed.

That said, affordable housing and industrial real estate are two sectors that are currently in high demand.  Consequently, opting to turn an old hotel in the heart of the city into affordable housing or extended stays might be the way to go. 

Alternatively, converting an old retail building into an industrial distribution center/warehouse to better serve the surrounding community could also be a profitable long-term solution. While there are definitely a number of hurdles to overcome in this process, including zoning and city regulations, there is definitely the potential for real opportunity here.

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What Will Rates Do the Rest of the Year?

Analysts and real estate experts believe that rates will continue to increase for most of the year. Not long ago, the National Association of Realtors (NAR) predicted that mortgage rates would reach 4% this year, which is slightly up from the 3% we saw rates hovering around throughout 2021. But rates are quite a bit higher that that already.

As of April 2022, the 30-year fixed rate is currently 5.11%. But be that as it may, it’s not entirely clear where rates will be by the end of the year.

Is Now The Right Time To Act On An Investment Property?

As a whole, the housing market is well past the recovery phase and is now booming with higher home sales. In fact, for the first time since the pandemic began, all four major components of real estate activity—the demand, supply, pricing, and sales—are growing above the pre-COVID pace.

Yet, some predicted that the pandemic could lead to a 2022 housing crash worse than the great depression. But that simply has not been the case. At least for buyers and investors alike, the good thing is that there is still a ton of demand for housing and very tight inventory.

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Ready to Apply For a Mortgage in WA, OR, CO, or ID?

Do you have questions about home loans? Are you ready to apply for a mortgage to buy a home? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington, serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest and have been doing so since 1992. Contact us today with any questions you have about mortgages.

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