Returns on Single Family Investments Climb as Mortgage Rates Drop

Single-family rental properties are attractive investments. They generate income, appreciate over time, and when purchased using leverage can build equity using other people’s money. And, when mortgage rates drop like they recently have, they become even more attractive because ROIs sky rocket without any additional effort or investment on your part.

How much do low interest rates affect ROI? Let’s take a look at three live examples from our database of vetted investment properties at investor.homeunion.com, where we conservatively estimate our returns using a 5.25% interest rate and a 30-year loan. These examples have also been calculated using a 4.5% interest rate, the mortgage rate for investment loans as of February 6th 2015.

5.25% 4.0%
Price $79,900 $79,900
Investment $24,037 $24,037
Cash Flow $2,516 $2,865
Equity Build $901 $1,031

Euclid, OH

Return 14.22% 16.21%

This Cleveland market investment property, located in the suburb of Euclid, Ohio, has an initial return of 14.22%*. However, by investing using a 4.5% interest rate, the returns are increased by 1.99%.

HomeUnion Investment Property in Antioch Tennessee 5.25% 4.5%
Price $126,500 $126,500
Investment $32,648 $32,648
Cash Flow $901 $1,453
Equity Build $1,427 $1,633

Antioch, TN

Return 7.13% 9.45%

This Nashville market investment property, located in Antioch, TN has a base return of 7.13%*. If you invest today, with a 4.5% interest rate, the returns go up by 2.32%.

HomeUnion Investment Property in Fort Worth Texas 5.25% 4.5%
Price $75,000 $75,000
Investment $19,150 $19,150
Cash Flow $506 $1,044
Equity Build $846 $1,057

Fort Worth, TX

Return 7.06% 10.97%

This Dallas market investment property, located in Fort Worth, TX has a return of 7.06%* when returns are calculated at 5.25% interest. By investing now with a 4.5% interest rate, the returns go up by 3.91%, again without having to increase your investment amount.

What does this mean to you, the real estate investor? 

While these returns are conservative, they only go up if you invest using today’s low interest rates.

As you can clearly see, investing with today’s low interest rates gives you an increase in your ROI over our baseline interest rate – without having to invest a single penny more. The great thing about the increased return is that you can use it to pay down the mortgage faster, or use it as supplemental income.

To see how these returns were calculated, register for our investor platform, then come back and click on any of the properties above. Click on the Financial Details tab, then select the Financial Calculator. Using the Financial Calculator, you can manipulate a number of fields, including the mortgage rate, down payment, rate term, annual rental income, as well as a number of other data points.

HomeUnion Investment Portal

HomeUnion Investment Portal

HomeUnion Investment Portal

Curious to see what the numbers would look like for you? Register today on our investor platform to take a look at over 400 fully vetted properties across the country, and begin building your own single- family investment portfolio.

About HomeUnion

Don’t have time to find a good investment market, vet out properties, find a property a property manager and tenant, or deal with any of the other intricacies of buying an investment property? We make this process completely hands-free. HomeUnion’s fully managed investment service empowers prospective investor with the tools and data you need to find a cash flowing portfolio of investment properties tailored to your desired ROI.

No Comments

Need Help Investing?

We have experienced real estate investment professionals standing by to answer questions and help you with next steps.