Hedging (and benefiting from) interest rate rises
I'm about to refi an 8-unit residential property on a note with a 3yr term. I modeled a future refi in 2017 with an interest rate shock and realized that if rates at that time got beyond 8% I might have trouble meeting debt service requirements.

Big investors have access to interest rate swaps but I'm not in that league. Nor do I feel comfortable in my ability to play the futures market correctly. My questions are:

1. Is there some sort of accessible and reasonably priced financial product for people like me to guard against big interest rate hikes?

2. If interest rates do climb, what will happen to property values? Logic predicts that they will stagnate or tumble because the cost of debt will be higher, but RE is often illogical. Do you have any insights?

3. Is there any way as a real estate investor to take advantage of predicted rate rises? For example if there is likely to be a wave of commercial defaults in the late 2010s, a smart investor could hold onto liquid capital to snap up some bargains.

Thanks in advance for your thoughts.
[{"id": "ch69uj7", "text": "Rising interest rates would weaken the US dollar. You could short (sell) USD on the FOREX market as a way to hedge against interest rate increases. \n\nInterest rate increases **CAN** increase the value of a RE, this is when demand hasnt shifted --&gt; owning property becomes harder to obtain and would be more exclusive, so it carries a premium. \nIf people find that the increase makes RE undesirable though, it would lose value. ---&gt; so basically it depends on which effect dominates. \n\n\nMost people would argue that interest rates lower the face value on RE though, like it does a bond. \nThe easiest way to take advantage of you a predicable rate increase is to lock in current rates. --&gt; get a fixed interest rate", "replies": [{"id": "ch6a8u9", "text": "&gt; get a fixed interest rate\n\nAgreed, but it's just not possible with commercial properties. \n\nI agree with your comment about demand being a vital factor. Other analyses I've seen indicate that rising interest rates usually go hand in hand with a strong general economy and rising inflation, which tend to push up property prices. So maybe I'm worrying about nothing. I would like to set my mind at rest with a hedge though. I'll think about your forex idea.\n", "replies": [], "depth": 2}], "depth": 1}, {"id": "ch88ti2", "text": "Do you plan to get rid of the property in three years or less? Why would you refinance for 3 years in this environment?  This is the type of financing most small banks do every day. Look for a 10 year deal with a five year repricing.  Avoid having to pay origination fees, doc stamps, appraisal fees, etc. in three years. ", "replies": [], "depth": 1}, {"id": "char2n6", "text": "I have a spreadsheet that I will dig up tomorrow and post here that looks at the correlation between interest rates vs cap rate. In my experience a rise of few hundred basis points (interest rates) can cut out much or all of someones NOI increases.  This is actually what I talk about quite a bit with anybody thinking about selling apartments in my market within the next 5 years, prob less.", "replies": [], "depth": 1}]