Interest Rates: Ingredients for a Successful 2013-14

BEVERLY HILLS, CA-As we near the close of 2013, many wonder what the future of interest rates will hold in the months ahead. As interest rates rise—and they most likely will in the coming months—it will be a result of an improving economy that should also result in increased demand for real estate. The rise of interest rates will create cap rate inflation, some of that inflation, or loss of value, will be offset by the increase in rental rates. The unfortunate bottom line is that we will undoubtedly see more loss of value as interest rates rise than we will see an increase in value from rental rates or improving operating fundamentals.

Hence, for 2013-14, investor uncertainty can be daunting and many wonder what will happen to their real estate investments when interest rates rise. There are three keys for investors to remember as we near the end of the year: