Real estate investors lock in - MoneySense

Real estate investors lock in

CEOs and property managers take advantage of 10 year fixed terms.


Lock in for a long, long time.

That was the advice commercial real estate investors, such as real estate investment trusts (REITS) and property developers, were espousing to hundreds of professional property investors at a CIBC real estate equities conference earlier this week.

While there were a slew of other messages, the most agreed upon strategy for dealing with current economic conditions — and future uncertainty — was to lock in to the historically low interest rates. And lock in for the longest possible term.

“It’s the first-time we’re borrowing 10 year money at a fixed rate from the banks,” explained panelist Michael Cooper, managing partner, Dundee Real Estate Asset Management and CEO of Dundee REIT.

According to these professional real estate investors, interest rates are a “distraction” to good business investments. That means if you can reduce the volatility produced by interest rates—and at the same time reduce the cost for this debt equity—then do it, do it, do it. And then do it again.

Perhaps that’s why this panel of CEOs and REIT managers all acknowledged to locking in to 10-year fixed term mortgages.

But was does it mean for us, the average homebuyer? Not much if you’re looking to get the cheapest monthly rate on your new or current home purchase.

If, however, you’re looking at rental properties or real estate investments (commercial or residential) you may want to heed the advice of professionals and lock in your rates.