How Real Estate Developers Can Benefit From 0% Federal Funds Rate
The novel coronavirus continues to introduce disruptions in construction projects. However, to tackle the issue, real estate developers can benefit from the 0% federal funds rate for their building projects. The US Federal Reserve, on March 15th 2020, reduced the federal funds rate by a total of 1.5%, bringing it down to 0% - 0.25% for cushioning the economic impact of COVID-19. The Federal funds rate is the interest rate at which depository institutions, like banks and credit unions, lend reserve balances to other depository institutions overnight. This measure was last used during 2008-2009 financial crisis to incentive the US economy. The impact of coronavirus on the economy is inevitable, however, developers can now benefit from the 0% federal rate for low interest rates. To answer the popular misbelief regarding loans, the reduction in federal funds rate does not mean 0% business and mortgages are available. However, the interest rates in general will drop which brings 2 benefits for real estate developers: The 0% federal funds rate offer an opportunity for real estate developers to develop projects with lower ownership cost during their service life. Also, by implementing energy efficiency measures, water conservation, and on-site renewable energy generation, developers can further reduce the building operating costs. Existing building owners can also benefit from the reduces fed funds rate by availing lower interest rates for building upgrades and renovations. Starting Pre-Construction During COVID-19 Outbreak With the help of modern design software and advanced collaborating tools, buildings can now be designed, reviewed and finalized without physical meeting. Developers can have virtual meetings with architects, engineers, design team, and also bank and law firms during every stage of the building project lifecycle. Thus, developers can start building projects even during emergency situation like coronavirus outbreak while ensuring all the construction requirements and prerequisites are met. Thanks to the 0% federal funds rate, developers can obtain attractive financing terms from the banks. Additional benefits like zero-interest grace periods can be offered by some financial institutions in addition to low interest rates. Homeowners can also avail benefits as the Home Equity Line of Credit (HELOC) will also drop due to 0% federal rate. This type of loans is an excellent option for building renovation projects. Credit card rates will also drop slightly and offer further savings for homeowners who use them. HELOC can also be used for building upgrades like energy and water conservation or solar panels installation. How 0% Federal Funds Rate Affects Loans During early 2019, the fed fund rates were 2.5% which results in a prime rate of 5.5%. Following the drop in March 2020, the fed fund rate is 0% - 0.25% which results in a prime rate of 3.25%. In order to visualize how this affects the construction project loans let consider an example. Assume a developer is planning a $50 million project. The monthly payments for a 10 year tenure loan with 2019 prime rate and the current prime rate are compared below: As you can see, the monthly payment with the current prime rate is reduced by $54,000. The total savings during a 10 year tenure would accumulate close to $6.5 million. This is a simplified example, but it demonstrates the concept. As mentioned earlier, these savings can go higher if the project includes energy efficiency measures, water conservation measures, renewable energy systems like solar panels. COVID-19 will delay the construction projects, but choosing the right engineering team will not only result in cost savings, but also introduce a permanent effective strategy for construction projects as we move ahead. Source: Free Articles from ArticlesFactory.com I am a digital marketeer with over 2 years of experience in developing and implementing marketing strategies for increasing organic traffic, creating customer engagement and ultimately generating leads..
Top blog stories
A review of Idmobile.com
Idmobile.com offers both pay-as-you-go and contract plans. Pay-as-you-go plans are ideal for customers who don't want to be tied down to a long-term contract, and they can purchase bundles of data, minutes, and texts as and when they need them.
Idmobile.com offers both pay-as-you-go and contract plans. Pay-as-you-go plans are ideal for customers who don't want to be tied down to a long-term contract, and they can purchase bundles of data, minutes, and texts as and when they need them.
AO.co is a trusted expert in TVs, washing machines, clothes dryers and other household appliances. AO.com is one of the largest retailers in the UK and it specializes in electronics, clothes and home furniture.
At Three, we believe phones are good. They just make life better. Easier. And more fun. But
we all need to find a balance that works for us. Our mission is to help our customers use
their phones to live their best lives.
We make your life easier
Since 1992, we’ve been helping customers get the best deal on their dream phone. We firmly believe in giving you the highest quality, for the lowest price. That’s why we work with three of the UK’s leading networks to do all the haggling for you,...
At Halfords, we're all about the journey. With more than 700 stores with over 10,000 colleagues, we're the UK's leading retailer of automotive and cycling products. We are also the leading operator in MOT, tyres, car servicing and car repairs - pleasing more than 750,000 customers every year.
It's important to us that everyone gets great customer service and can enjoy our products, no matter their level of sight. So, if you're blind, partially sighted or struggle to see or read the screen, we’ve a range of features to help you get the most from our products and...
Look iconic, without the hassle— using Nasty Gal discount codes, you can shop your favorite pieces for way less by simply entering one of our promotional codes (of your choice) at the checkout. From delivery offers, to promo deals, we keep ‘em coming, so you always have the offer you...
The Covid-19 has caused the school and universities to shut down around the world creating a major issue in Learning and Education. As this virus spreads through the interaction and if social distanci... The Covid-19 has caused the school and universities to shut down around the world creating a major...
Why its Important to Manage Your Holiday Calendars?
A printable calendar 2021 is a prominent online platform where you download printable calendars of your choice. These calendars can be customized as per our client requirement with photo, text, logo, or any other image. If you are thinking of planning a dream vacation tour with family and kids but...
Idmobile.com offers both pay-as-you-go and contract plans. Pay-as-you-go plans are ideal for customers who don't want to be tied down to a long-term contract, and they can purchase bundles of data, minutes, and texts as and when they need them.
Idmobile.com offers both pay-as-you-go and contract plans. Pay-as-you-go plans are ideal for customers who don't want to be tied down to a long-term contract, and they can purchase bundles of data, minutes, and texts as and when they need them.
AO.co is a trusted expert in TVs, washing machines, clothes dryers and other household appliances. AO.com is one of the largest retailers in the UK and it specializes in electronics, clothes and home furniture.
At Three, we believe phones are good. They just make life better. Easier. And more fun. But
we all need to find a balance that works for us. Our mission is to help our customers use
their phones to live their best lives.
We make your life easier
Since 1992, we’ve been helping customers get the best deal on their dream phone. We firmly believe in giving you the highest quality, for the lowest price. That’s why we work with three of the UK’s leading networks to do all the haggling for you,...
At Halfords, we're all about the journey. With more than 700 stores with over 10,000 colleagues, we're the UK's leading retailer of automotive and cycling products. We are also the leading operator in MOT, tyres, car servicing and car repairs - pleasing more than 750,000 customers every year.
It's important to us that everyone gets great customer service and can enjoy our products, no matter their level of sight. So, if you're blind, partially sighted or struggle to see or read the screen, we’ve a range of features to help you get the most from our products and...
Look iconic, without the hassle— using Nasty Gal discount codes, you can shop your favorite pieces for way less by simply entering one of our promotional codes (of your choice) at the checkout. From delivery offers, to promo deals, we keep ‘em coming, so you always have the offer you...
Search topic
Nasty Gal - We exist for the “girl in progress”.
Look iconic, without the hassle— using Nasty Gal discount codes, you can shop your favorite pieces for way less by simply entering one of our promotional codes (of your choice) at the checkout. From delivery offers, to promo deals, we keep ‘em coming, so you always have the offer you...
