In my last video I covered why mortgage rates are going up. It’s not the FED doing it. If you haven’t seen it, check it out. I’m doing a short series here in my next couple videos to cover some of the misinformation circling out there because I want you to be informed. Whatever you decide to do – if you’re looking to purchase something right now, it’s not a terrible time to do it. Let’s talk about a couple realistic scenarios if you have to, or just want to buy real estate right now. And if you’re selling real estate right now, this also good info for you.
Let’s cover one or two basic strategies to purchase investment properties, and primary homes in this market. Realistically this will work mostly for those who either have some money saved up, or for any other reason can afford a loose cash spend.
What’s the easy way in to a good deal? Well, all that money you had been saving up to be more competitive, you can now use to buy some points down. Did you know that you can reduce your 6% interest rate on your mortgage down by a point or a point and a half? 4.5 and 5% sound a lot better right? It’ll reduce your payment by hundreds of dollars a month. And here’s the thing to remember, you make your money on the purchase of real estate, not the sale – I’ve said this before. So, because the market is less competitive right now – some people just can’t afford the down payments to get the price to a reasonable monthly payment – you likely will have some negotiation room on prices. That said, we are also in a place where sellers are reducing prices when those homes are “over priced” for market conditions.
Here’s a tip for both buyers and sellers. The last two years listing agents and sellers were pricing homes “up”. Meaning they added 2-5% to the actual market value of the home when they listed, or more in some cases, because things were so competitive they knew they could get it. And values were literally going up by 5% a month in some places, at peak times. So the biggest change you can take advantage of right now as a buyer, is to offer a more reasonable, realistic price for a home that’s been on the market for a while. Or one that’s just hit if it’s a little high. Homes should be listing at a reasonable price point right now, and I’m not saying they’re not, but I am seeing prices come down on houses that have been on the market a while.
Last tip: Again, this works if you have cash to spend. Obviously you can look for deals on this market – there are more and more off-market properties coming up. Call me, I’ll tell you about all the ones I’m aware of. If you can spend $150k, you can buy an investment property right now. But also if you have that much, you’ll have to spend it ALL to get the debt numbers right so you can actually have a Net Income. But that’s not hard money to find for the investors that are wanting to expand right now. That’s what businesses do during these down times, expand and reinvest in their inventory – some are buying new inventory.
Here’s the tip – spend the cash now, because you can get a better deal that way, and once you have the inventory, because the value will go up, you’ll be able to flip the financing when rates are better next year. Put the cash back in your pocket and do it again. At that point you have the equity.
I’m aware this is not news to seasoned investors. But it’s never a bad time to remind, and I want to speak to this because from what I see – boots on the ground – the deals are there. Don’t miss the forest for the trees.
You want to know more about my thoughts, what I’m looking at, I will be happy to share. Call any time.