So it looks like interest rates may either plateau or go down given the latest comments from Ben Bernanke. I'm hoping the stay low, of course for obvious reasons, I'm buying a house at the moment. Regardless though, it helps the smaller investor to have low rates because bank loans are easier to get if you have good credit. Even though there are positive signs in the economy it's not time yet to raise rates (personally, I don't think it's ever a good time).
Bernanke basically said that he doesn't have any intention on raising the rate in the near future which basically translates into the rest of the year. Hopefully with this news we will see a continued rise in home sales and there will be revenue for those investing in the housing industry, which by the way is my index of choice right now. This will also translate into good news for those wanting to buy cars because car loans will be cheaper. So in effect this is an all around good indicator for the economy.
Showing posts with label interest rates. Show all posts
Showing posts with label interest rates. Show all posts
Friday, July 19, 2013
Thursday, June 13, 2013
Are REITs Down For The Count?
As you know I've been a fan of REITs and one in particular ARR. It's been a rough few weeks for REITs who have taken a beating because of the murmur about the Fed easing up on QE3. This would cause interest rates to go up and take away some of the stellar profit margins that have been making REITs attractive.
Even if interest rates go up the effect on the profit margins will be minimal. If you consider that these REITs can pay down some of their indebtedness and refinance to create a bigger profit margin. The advantage that REITs have is that their commodity is real estate. It's not like any other good or service that you would have trouble getting financing for.
I personally feel that this is a minor inconvenience. If you look at ARR when interest rates were higher the dividends were even higher than they are now. That tells you that the company knows how to restructure their books to create the profits that allow them to pay the kind of dividends that they have been paying.
I think that now is the time to stock up even more on ARR.
Even if interest rates go up the effect on the profit margins will be minimal. If you consider that these REITs can pay down some of their indebtedness and refinance to create a bigger profit margin. The advantage that REITs have is that their commodity is real estate. It's not like any other good or service that you would have trouble getting financing for.
I personally feel that this is a minor inconvenience. If you look at ARR when interest rates were higher the dividends were even higher than they are now. That tells you that the company knows how to restructure their books to create the profits that allow them to pay the kind of dividends that they have been paying.
I think that now is the time to stock up even more on ARR.
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