Why I Made an Offer for a Property in Austin, TX
With the Fed slashing interest rate to 0-0.25% in March 2020 due to the response to the CoronaVirus (COVID-19), the real estate market became more attractive. The fed funds rate is the rate at which commercial banks borrow and lend money to each other. This rate is typically set by the federal open market committee (FOMC). The Fed Funds Rate has seen a decline from 2.5% to 0.25% YOY with recent talks on negative rates in the near future. This is a 225 basis point drop and represents a 90% drop in the fed funds rate YOY. The Fed has downplayed the implementation of negative rates, citing that the central bank was not even contemplating the issue. Even without negative rates, owning a mortgage has become very attractive and can boost the returns for investment properties when leverage is used properly. I have highlighted the benefits of real estate in a previous blog post. In this blog post, I will explain the rationale behind my single family real estate offer in Austin and current the…
