If you’ve been heavy in bonds and light on equities over the past several months, you’re likely patting yourself on the back. Mortgage bonds in particular have traded in a very tight range over the previous two quarters and it appears Q3 will report similar results. In spite of the gyrations from China to Wallstocks bonds real estate Street, financing for investment properties has remained extremely competitive and still near historic lows.

One year ago, the 30 year fixed rate for an investor property was hovering near 4.50% while today, that same rate is closer to 4.125%. On a $500,000 note on a quad unit, that’s a savings of nearly $40,000 over the life of the loan. This long term, low rate environment has been a boon for investors.

A recent article on cnbc.com* highlighted the continued pace of institutional investors buying rental properties, in spite of the fact the “low hanging fruit” of foreclosures is fading. Developers are also building new homes just for the purpose of renting them out. Investors, both large and small, entered the REO purchase market in droves as home values hit rock bottom. Traditional thinking would expect such investors to sell those properties in today’s environment. Home values nationally have not only recovered equity lost during the housing crisis but exceeding it. Yet investors are holding, not selling. Why?

According to the article, the home ownership rate still continues to fall and is the lowest in 50 years while at the same time home sales are increasing. This means there is a greater demand for renting which pushes up market rents. When coupled with extended low rates, investors are enjoying a healthy increase in equity as well as a continuing increase in monthly cash flow. Long term, fixed rates today will only contribute to better cash flow in the future.

*cnbc.com "Investors Snapping Up New Homes" Diana Olick, September 10, 2015