How do interest rate caps impact long-term real estate investments?

Interest rate caps can have a significant impact on long-term real estate investments by limiting how much interest rates can rise on loans or mortgages. These caps provide stability and predictability for property investors, as they prevent sharp increases in borrowing costs, which could negatively affect cash flow and property values. In a rising interest rate environment, properties with interest rate caps on loans may be more attractive to investors, as they provide a safeguard against higher financing costs. However, if interest rates remain low or stable, the benefits of interest rate caps may be less pronounced. For long-term investors, interest rate caps provide an added layer of financial security, reducing the risk of higher debt servicing costs.