Talk about a tennis match. Good thing there’s still real estate in which to invest but trying to follow this back and forth, “will they or won’t they” guessing game regarding when/if/why the Fed will finally raise the Fed Funds rate is challenging to those Renting OR Buying?with a sore neck. And if you don’t have a sore neck, you might soon have one as pundits tell us when/if/why the Fed will raise rates. Does it really matter if they do or they don’t?

For the real estate investor, it doesn’t really matter an awful lot. Sure, rates for real estate investors on single family and 2-4 unit properties are about 0.25% higher than they were late last summer but is that really a cause for concern? Not really but it does have some effect on those who are buying their first home or getting ready to rent an apartment. When rates do go up, it’s harder for buyers to qualify, not by a lot, but the number can’t be ignored. With fewer potential buyers who qualify for financing investors are negotiating with fewer buyers, putting them in a less advantageous position.

On the other hand, when buyers can’t qualify, they have to have somewhere to live and that means they must rent. More renters obviously means more demand for rent which therefore means more money for landlords. And even for future real estate investments, increases in financing costs come in very incremental moves. Investors shouldn’t be surprised to see higher rates as they’re to be expected in this environment, the difference is just a matter of when. The next increase should be another 0.25% bump and historically anything higher than a 0.25% move means the Fed is panicking one way or the other and will cause investors to absorb some of that panic and follow suit with equity selloffs. For the immediate future, perhaps even through 2016, residential real estate looks very, very good.