How To Prepare for a Rise in Interest Rates

How To Prepare for a Rise in Interest Rates

by | Blog, Finance & Budgeting, Interest Rates, Invest in Real Estate, Property Investment

Right now, in Australia, we are experiencing a record low in interest rates – meaning cash is cheap and it’s a great time to borrow and invest.

But it’s unlikely to last. In fact, it’s not a matter of if more than it is when…

Smart property investors know that it’s dangerous to get too comfortable. Real estate is an ever-changing thing. Markets go up, down and plateau – and so do interest rates.

The question is, how prepared are you for a sudden spike?



The key to being ready is having a strategy.

Before you spend a single cent on property, you should first devise a long-term plan that takes into account:

  • Changing interest-rates
  • Changes in capital growth
  • Emergencies
  • Changes in personal circumstance

Let’s be clear. 

While a clever strategy considers and plans for all of the above, the end-game itself is NEVER influenced by any of these changing factors. Instead, because these variables are anticipated and accounted for, investors can remain focused and unphased by market distractions or disturbances.



If you’ve invested or held property in Australia in the past 12 months you’ve probably locked in some low-interest rates. 

Hopefully your rent rates are healthy and you’re in a positive cash flow situation, with more money coming in from your investment than is going out.

What you do with that cash flow will make all the difference if interest-rates rise.

Spend it on assets that look pretty but don’t appreciate – think cars, jet skis, expensive clothes etc – and you’re not taking advantage of a good situation.



Instead of splashing out on high-ticket items because of the savings you’re making off low-interest rates, use this opportunity to get ahead of the game. 

The number one thing property investors need to do when the going is good, is to create a financial buffer for each of their investment properties.

A buffer is an emergency amount of capital or money that investors can use. The key to this buffer is that it’s liquid. It’s real cash that you can get your hands on easily and quickly.

A buffer protects you if your circumstances change, if a tenant doesn’t pay rent, or if something in the property breaks and needs a fast replacement. 

It also means that when interest rates increase and your rent rates take a while to catch up, you stay in the black. 

Over time, if you continue to pay into the kitty, this buffer can even allow you to renovate your property when it needs a lift, which will help to keep your rent rates high. 

We recommend having anywhere from $5-10k per property to make sure you never have to put your hand in your own pocket for when the unexpected happens. 

As property investors we want 100% of the cost of our properties – that’s renos, insurance, emergency maintenance and any interest-rates spike – to come out of a buffer, and not our pockets.

Talk to the coaches at Positive Real Estate about how to structure your strategy so that your buffers are healthy enough to keep your properties paying for themselves.



There’s no denying that everyone has an opinion regarding the real estate market right now, but the truth is, no-one is an expert except the experts! They’ve been in the game long enough to see how the different property cycles work and what you need to be aware of right throughout your investment journey. 


Learn more about how you can take advantage of the current property market at one of our free property investor seminars. You’ll be led by a team of professionals who have demonstrated experience working across all types of markets so you can optimise your ability to grow a budding portfolio, create passive income and get set for the future – whatever that may look like for you. 

Spaces are limited. 


Register for the free property investor webinar now.

Recent Articles

Should I Buy An Investment Property Or Home First?

Owning property has always been part of the great Australian dream. A lot of people want a place to call their own, with stone benchtops, the latest appliances and a great entertaining deck out back. So, when interest rates hit a record low in the last couple of years and it suddenly started to cost the same to own as it does to rent, why wouldn’t you have just bit the bullet and bought your own home?

Guide To Investing In Positive Cash Flow Property

If you want to become a superstar property investor and be on the path to financial freedom, then you’re going to need this guide to investing in positive cash flow properties! Investors that follow a positive cash flow strategy understand that living off passive income is the key to an early retirement – and the only way to do that is to make our money work for us, not against us.

How You Can Be 3-7 Years Away From A Multi-Million Dollar Property Portfolio

Using real estate to become a successful property investor is underpinned by one very important philosophy – profits are better than wages. The goal of property investors in the market is to target optimistic returns. However, this does beg the question – if property investing is such a smart and lucrative profit making machine then why don’t more people do it?

Property Strategist Sam Saggers: ‘How You Can Benefit From My Wins And Losses’

Real estate is a game of winning or losing, and as a professional property strategist, in order to get to where I am today, I can honestly say I’ve experienced the full spectrum. But to understand how I’ve managed to turn any loss I’ve had into a gain and support others to do the same, it helps to know where it all began.