This year has witnessed some important economic developments, the federal deficit for the fiscal year being one of the most important. The deficit is approaching two trillion dollars (with all of the accompanying problems) while the fed is printing more dollars (treasury debt) than revenue can support. Consequently, there is a strong probability that future interest rates will increase, and this will be accompanied by above average rates of inflation.

The possibility of these events calls for focus on the financing side of income property investments. Establishing competitive financing for the present eliminates the risk from increasing interest rates, and further exploits inflation by paying back debt with less valuable dollars than initially borrowed. Combining the right financing with discipline for in depth due diligence and the appropriate capitalization rate (cap rate) continues to offer the highest probability for a successful income property investment. 

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