Rising Rates, and a real estate investor’s options

So, I got back from a trip yesterday (my sister competed in her first triathlon and I was her cheering section) and on the plane ride home the people sharing my row were discussing the rising mortgage rates.  Instead of joining in the conversation, I restrained myself and simply listened.  Their discussion echoed the fears of many—rates will keep spiking upwards causing all sorts of negative effects.   And news analysts are saying the same thing.  You can’t surf the web without finding endless articles talking about the rising mortgage interest rates and the predictions from various sources that this increase will hold steady for some time.
 

As an investor, these ominous rising rates means higher monthly payments which equates to higher holding costs—rather that investment requires a short hold-time or a longer hold-time (and keep in mind how sometimes short-term holds turn into long-term holds due to external factors like market fluctuations.)  While this might mean a $25 monthly increase for some, the number increases exponentially as the loan amount increases.
 

While openly acknowledging that rising rates and higher holding costs affect the market in a complicated, multi-variable way, I refuse to believe that real estate investing is no longer a viable, lucrative way to invest.  There are alternatives, viable alternatives, for investors hoping to avoid the rising rates found in mainstream lending streams.  Two examples, private lending/hard money and certain types of adjustable loans, are avenues that–if approached wisely and used correctly–can be effective tools. 
 

But, investors beware and do your research before pursing either.  In the same way you wouldn’t use a hammer on a screw; an adjustable rate mortgage is a tool appropriate for certain investment endeavors.   This caution also applies when addressing hard money or private lending.  Side stream lending programs such as this varies extensively from lender to lender; each program has certain strengths and weaknesses that cater to different types of investments.  Take your time and find one that fits your needs.