Is RIGHT NOW The Best Time To Buy a House? Real estate revolution podcast Episode 16

Coming up on this episode of the Real Estate Revolution. If part of your path and part of your investing or wanting to invest in real estate is, you're gonna have to realize that there is no perfect timing in the market. Stop taking advice from Uncle Louie when it comes down to real estate. So this is a nickname my dad gave somebody years ago because we've all represented these buyers and sellers that all of a sudden Uncle Louie comes on the scene. The guy hasn't bought or sold a house in 20 years, but he's going to give you advice that combats what we're doing to help you. So let's just talk about that. And here's Uncle Louie's advice. Right now. Is now the right time to buy a house? And Uncle Louie is probably telling you no, because the market's going to crash. And the reality is there is so much more to whether the market is crashing or changing. And the reality is, is that there is no perfect time in the market. The question is, with the variables that you know exist, what can you afford to buy and why wouldn't you if you could, right? So we look at it, you know, the question always is, is, am I better off buying a higher price house with a lower interest rate or lower price house, higher interest rate? The reality is both of them are right. And here's why I say that is because if part of your path and part of your investing or wanting to invest in real estate is, you're going to have to realize that there is no perfect timing in the market. And let me give you a couple of examples. If you had a regular loan in 2007 and you bought at the height of the market and you had a 5% interest, even though the price of the house is plummeting, the mortgage payment was going to stay the same. And you could either stay there and live in it, or you could keep it as a rental, right? Even though the rents were down at that time. Now, if you hadn't bought a home, then, sure, there was. There was a time that all of a sudden the prices had plummeted. So now you're looking at going, well, I can buy the same house that I paid $200,000. I can buy it for $100,000, which means it's on sale. So some people didn't think of it that way. They're like, oh, well, it's going to continue to crash. And this, that and the other. The absolute most amount of money that was made in real estate was from 2008 to 2012, 100%, hands down. If you were in that market, you were prepared, you were capitalizing, you're going through it now. For anybody that is on a journey of wanting to invest in real estate, then you'll realize like, okay, so we bought a house in 2007, we kept it as a rental and then the value went down. But then if you had kept it 20 years later, that house was doubled in value because of timing in the market. Right? So it went down and then it went back up. And if you kept it, it'd almost be PA paid off by now as well. But we have this fear tactic of, well, what if it does this, what if it does that? What if you have the mindset that it doesn't matter because the idea is to keep the homes and house hack your way from one house to the next until you can buy investment properties and keep those properties to build long term wealth. But when you call somebody, typically what's happening is you have some fear going on, which I totally understand because you're about to step out and do something that is scary, which is buying a house, taking on a higher interest rate than maybe what you've been told. Right. Rumor has it interest rates used to be at 2%. That is true. And they're going to go up and down. That's what happens. But if you can be in a market right now where, yes, there's a little bit of fear and maybe you can't afford as much of a house as you want right now, here's the mindset difference is that if you're looking at it going, hey, you know what, I'm going to buy this house. It is going to be a rental property. It is not going to be a long term stay. I'm okay making that sacrifice to get into something that I know I'm going to keep. And I also know that maybe the rates will change over the next couple of years and you can refinance that into a better payment. But if the rates do start to change and you haven't bought a house, what's going to happen? The prices are going to start to go up. We're already showing a low inventory. You know, it's currently end of 2023 or middle of 2023 and we're starting to see multiple offers and things. So if all of a sudden interest rates were to drop by a percent, you'd have a whole new batch of buyers you're competing with versus if you bought something and the interest rates drop, you just get to go refinance you don't have to compete with the crazy, because this is what could happen if right now, in July of 2023, you can get a 7% owner occupied rate, you can put 3% down or three and a half using FHA and buy up to $540,000 in a home and all of a sudden like you pay $500,000 for that house, 7% interest. And now we fast forward a year and the interest rates drop and that same house starts to increase in value. So let's say now there's multiple offers and it's being bid up from 500 to five and a quarter. Yes, their payment is lower, but incurred another $25,000 in debt. And to where if you had bought with a higher interest rate and that started to happen, you'd now be capitalizing on the increase in values, which is exactly what happened pre pandemic. And during the pandemic, you know, people didn't think it could sustain. And so there was people that got lucky by going, you know what, I am just going to go ahead and buy a house. It doesn't matter if the interest rates are a little bit higher. Inventory is going to be a little bit lower. I pay a little bit more for it. It's probably part of market timing and I want to go ahead and do that. Those people that had that mindset, which you may be on the fence about right now, those people that did that in 18 and 19, they like 10x their return, if not more, because the house prices nearly doubled during pandemic. So they got really lucky by not trying to time the market right. And then you had those people that bailed out of fear during the pandemic that the real estate market's going to crash. I need to sell, I need to get out. And they left hundreds of thousands of dollars on the table when they could have simply kept them as rentals and move to the next piece. So we got to back up to where your mind really is when you're getting ready to buy real estate. And the mindset should be, I'm not only buying real estate, but I'm going to invest in real estate. I'm going to invest where I'm buying a home, where I'm going to live for a short period of time until I can convert that to a rental and go buy the next house that may be your forever home. And you that you may just want two homes. And that's great, that's a great goal. One is better than none, two is better than none. Right. But you're also missing some of the other piece pieces that go with it is some of the the tax write off for owner occupying right you get to write up $10,000 a year off of on interest rates and you know, it's a home and it's where you're establishing your residence. And for those of you that have kids, I want to kind of point this out as I had this conversation yesterday with a client was they have younger kids, 2 and 4 and he's concerned about hey, we really want to buy our forever home in the next couple of years to get our kids settled down. Are you looking for a lender that is going to help you structure your just the way I do in my business? Well, I want to introduce you to Andrew Caram, the sponsor of this podcast. He is with Edge Home Finance. He is a broker and he is a lender strategist just like I'm a real estate strategist. And he's going to help you get through all the what ifs and how to's by breaking it down and really showing you a great way in the home loan process or in the investment side of the process. So reach out to Andrew. His contact information is in the show notes. And thank you for our sponsors this week. And back to the show. I'd like to give you a little bit of a personal opinion on this because I've raised two boys. They're 18 and 20 is when your kids are younger until they're in about that 10 to 12 range, which is right around the time we bought our forever home. They're not so in tune with where things are going to be. Right. You could live in five different homes in the time before they're 10 and they're really not going to know the difference. And with the way schools have changed, you know, a lot of you are sending your kids to private school or charter school. There's so many different options for schools that it doesn't necessarily determine the area you want to live in anymore. Right. Because you can buy in certain places and still take your kids to that school so they're not disrupted school wise. We're not confined to these zones in these districts when our kids are going to charter school or those types of things. And you also have some ability to get variances and all those different pieces now. So I'm not too concerned about the school part of it where I am more concerned about not a but what we saw was when we settled in that house when the kids were 10 and 12, that was when it was most important for them to have home and bring friends, especially when they became teenagers, because that's where all the teenagers floated to. That was the house that we wanted to have as we. And I think most parents are that way. They're like, I really want my home to be that house where all the kids come, right? So we raised, I don't know, 14, 15 kids that were constantly at our house and are still at our house. That was really where the emotional connection came with the home was. When we saw them starting to hunker down, that became home, that became safe haven, that became where they were bringing all their friends. So I wouldn't be too concerned on that journey when your kids are younger. When it comes down to the real estate side, I'd be more concerned about am I starting to build my real estate portfolio for that life, that legacy and those things that we want in the future through real estate. And the only way to do it is just to get started. Okay, like that, that is the most important decision. And you're going to have a lot of people that are like, well, you don't want to buy right now because interest rates are high and it's going to crash. But everybody said that into 21, 22, the real estate market was going to crash. It was just a different type, which meant the interest rates went through the roof, the prices went down a little bit, but they're starting to climb back up and we're starting to see that appreciation again. And so what happened was you sat on the fence because somebody told you, Uncle Louie told you the prices were going to come down. Instead, you lost the biggest opportunity to buy something with a really, really low interest rate, which creates a really good rental property down the road. So we do have to ask some more questions other than is now a good time to buy? Because the other questions are, well, is it a good time to buy based on what your future is going to look like? Right. So you may be into it where you're like, yes, I want to buy my first house, but it's going to be my first rental, which is, you know, where I teach a lot of first time home buyers is we're going to look at homes from a future investment standpoint. And by the way, if you're, if you're looking for, you know, to work with me on the real estate side of things, Please reach out stevedvalentine.com Go to the real estate section. And if you're looking for a real estate agent and company to guide you through the Investment process. That is a great place to start. You can also start by getting my book, Limitless Real Estate Strategies, which is also a great place to kind of get an idea into your real estate strategy. Investing in what is possible in this. I started no differently than you guys did, right? Which is I bought my first home when I was 20. My parents were like, you're going to keep it as a rental. We did it for a couple of years and then we did what we shouldn't have done, which is we sold the house to an investor we created. We got our cash out of it. I have no idea where it went. Didn't understand all the tax issues that come with selling a rental property and some of the other things. So you really want to have somebody that's really guiding you through all of these different questions and variables when you're asking the question, is now a good time to buy a home? And I will tell you that anytime is a great time to buy a home. But your strategy is more important in what you're buying and how you're doing it, because there's a lot of ways to get there. And not everybody looks through the eyes of the investment side. They look at it through the eyes of a sale and you're telling them what you think you want. And sometimes that person is not asking you other questions as to it's not just what you want in a home, but what is your future outlook? Are you planning on keeping this as a rental? Are you thinking about getting a roommate? Are you like. All these different business sides to owning a piece of real estate are very important when somebody is guiding you through. Is now the right time to buy a home? And again, anytime is a great time to buy a home. I just think you have to have the best strategy in place and know exactly what you're investing in and what your future looks like. And maybe it's not the right time, but if you don't talk about all the things going on in life, I can't always give you that advice. So it's really important to have that honest conversation, really know what you're looking to accomplish when purchasing that home. So right now you may be struggling with the fact that, well, I can't buy as big of a home as I wanted or as nice of a home or in the area that I want it to be. But can you buy something that might sacrifice just a little bit of those things, knowing that you're going to keep it as a rental property and then you're going to be able to maybe move in when rates change or whatnot, to something else. And again, that all takes a specific strategy that you're kind of working through in life. So, again, let's stop taking advice from Uncle Louie. And if you have Uncle Louie's in your life, you know, you can appreciate their advice, but really seek the expert advice. And who is guiding you through your real estate experience. That's what I'm here for. You know, not only do we do traditional real estate, we do a lot of investment. And then we do a lot of coaching and training for real estate agents to invest. Like what we have done and what we've accomplished. I really appreciate you guys joining me for this episode on the Real Estate Revolution. I'm Steve D. Valentine, and we will see you on the next episode.