It is Time for Property Ownership

Rising Interest Rates and the 504 Loan Program

After years of historic lows, interest rates are finally on the rise. Chairman of the Federal Reserve Board Ben Bernanke has said that the Federal Reserve would begin to taper their bond-buying stimulus program this year. The central bank launched the program in 2008 to help lower long-term interest rates and stimulate economic activity. 

What sparked this move by the Federal Reserve? Bernanke has cited economic improvement as a factor, saying, “the downside risks to the outlook for the economy and the labor market have diminished.” In other words, once the economy improves, there won’t be a need for keeping interest rates low.

Economic improvement is a good thing. When interest rates rise in tandem with better economic activity, it results in increased real estate values. If you own commercial property, this means the value of your asset increases. However, as the demand for real estate goes up, rents will go up as well. If you are leasing your commercial property, you can expect your rent to increase. This means more of your working capital will be gone.

The good news is that you still have time to capitalize on low interest rates, and there are many benefits to owning commercial property. Owning offers control, consistency, and financial advantages that leasing cannot provide. Even better, financing your property with Community Business Finance’s 504 Loan Program offers peace of mind with below market, fixed-rate loans for 20 years, fully amortized. 

Because interest rates are on the rise, securing a fixed-rate loan now guarantees a low interest rate for the entirety of the loan. The interest on the mortgage loan is tax deductible and you can take annual depreciation deductions on property taxes.

With property ownership you are also building equity. Equity is the difference between what your property is worth and what you owe to lenders. With real estate values going up, you build equity even faster. In addition, mortgage payments are often less than rent amounts. This not only saves you money in the long run, but also frees up more of your available cash each month. Paying a mortgage instead of rent lets your money continue to work for you instead of your landlord.

Do not miss this opportunity to finance your property before interest rates begin to soar. Community Business Finance can show you how property ownership is a real possibility with our 504 Loan Program. Contact us today and let us help you enjoy the security of a fixed-rate loan and the benefits of property ownership.

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