Short excerpt from a YouTube discussion about risks in residential/commercial real estate investing when investors are highly leveraged. The speaker warns that relying on short-term/private financing and then facing higher interest rates at refinance can force owners to sell properties; banks may refuse to refinance multiple recently-acquired assets, increasing downside risk.
Chapters
What's exciting you the most in the real estate investment space right now? What are you most energized about when you're buying things and you're over leveraging yourself and even just a couple of points difference in the interest rates at time of refinance. So they're coming into a position, you know, where they've used private money or whatever and now they need to refinance. They're forced to either refinance or sell. And if you have four or five properties that you picked up over the last year because it was really easy to get money and then you're coming to refinance, the bank might refinance one or two, but then they're going to start to say, okay, wait a minute, you just refinanced these two. It's getting more and more risky to keep going down and refinance. So they might be forced to sell rather than refinance. You want everybody to be successful, but you still need to maintain your composure and weight because you know what's coming in the next year or two years.