ROC Real Capital
  • Home
  • About
  • Agents
  • Listings
    • Properties For Sale >
      • Renovated Penfield Colonial
      • South Wedge Home Site For Sale!
      • Large Beechwood Cape!
      • East Irondequoit - 40 Falstaff
      • Northland-Lyceum Cape
      • Immaculate West Irondequoit Home
      • Small Warehouse For Sale In Public Market!
      • Penfield Home With 5+ Acres!
      • Mixed Use Build To Suit!
      • The Townhomes On Marsh
    • Properties For Rent >
      • Restaurant Space Available!
      • Bar / Tavern Space Available
      • Month to Month Small Office
      • 16 North Goodman Street
  • Our Investment Fund
  • Contact
  • Our Portfolio
  • BLOG

REal Estate Investor BLOG

THE GOOD... THE BAD... THE UGLY...
experiences as a real estate entrepreneur

Banks hedge their interest rate risk!  You can too!  With Interest Rate Swaps!

12/8/2018

0 Comments

 
​If you invest in any commercial real estate or 5+ unit multifamily deals.  You know that getting a fixed interest rate for more than 5 years is almost impossible.  Interest rate risk can be a bonafide threat to the performance of our business plan when underwriting investments in a rising interest rate environment.

Enter: Interest Rate Swaps.

Today I had breakfast with a company who sells a product to community banks called an interest rate swap.  What they do is help you effectively fix your interest rate for 10 years as opposed to the traditional 5 year.  Your interest rate will be marginally higher than if you stuck with a 5 year fixed however it may be worth paying a little extra for the safety of not getting caught in an interest rate reset when rates are high 5 years from now.

In addition to the predictability that this option provides, some of the other benefits are:

1.)  There is no prepayment penalty with your bank when you use this product.
2.)  You can potentially make a windfall if interest rates do rise.  Meaning, if interest rates rise, you can sell the interest rate swap for a profit.  However, if interest rates fall, you would have to pay out of pocket if redeeming a swap contract.
0 Comments

    Author

    Matthew Drouin is a full time real estate investor and REALTOR with 12 years of acquisition, disposition, development and management experience in Rochester, NY.

    The purpose of this VLOG is for Matt to offer content which is relevant to the experienced and inexperienced investor.

    Matt seeks to help others grow in their real estate investing career, so if you need help or guidance please do not hesitate to reach out.

    Archives

    January 2020
    December 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018

    Categories

    All

    RSS Feed

Powered by Create your own unique website with customizable templates.
  • Home
  • About
  • Agents
  • Listings
    • Properties For Sale >
      • Renovated Penfield Colonial
      • South Wedge Home Site For Sale!
      • Large Beechwood Cape!
      • East Irondequoit - 40 Falstaff
      • Northland-Lyceum Cape
      • Immaculate West Irondequoit Home
      • Small Warehouse For Sale In Public Market!
      • Penfield Home With 5+ Acres!
      • Mixed Use Build To Suit!
      • The Townhomes On Marsh
    • Properties For Rent >
      • Restaurant Space Available!
      • Bar / Tavern Space Available
      • Month to Month Small Office
      • 16 North Goodman Street
  • Our Investment Fund
  • Contact
  • Our Portfolio
  • BLOG