Tag Archive for: predictions

How to Create Wealth Investing in Real Estate

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Interest rates are currently high. This can create a discouraging market for new investors, but it’s important to look at the patterns of those interest rates so we can learn how to create wealth investing in real estate.

Real estate investing is one of the most accessible ways to create generational wealth. It takes two things to be successful:

  1. Leverage: knowing how to use other people’s money (bank loans, etc.) to turn a profit
  2. Math: know how the numbers work so you can use them to your advantage.

Even though interest rates are currently high, if we understand how to use leverage and math to our benefit, we’ll be creating wealth in no time.

It Comes Down to Numbers (and Interest Rates)

We’re all in real estate investing to create income, wealth, a better life. Interest rates are a significant aspect of that. We need to understand exactly how to leverage high interest rates to help you create the wealth you’re here for.

Here’s the good news: interest rates will likely go down soon.

If you buy a property when rates are high, you can refinance when rates drop to increase both your income and equity. 

For Example…

  • Let’s say you have a 4-plex that you’re going to purchase with the following figures:
    • 4-Plex (Initial Numbers)
      • Loan Amount: $500,000 
      • Interest Rate: 8.5% 
      • Monthly Payments: $3,800

    As we said earlier, rates are likely to decrease soon. We’re heading into a big election year which tends to drop rates, and the Fed is hitting their apex. So what happens when the rates decrease and we look at refinancing?

    • 4-Plex (Refinanced!)
      • Loan Amount: $500,000 
      • Interest Rate: 7.5%
      • Monthly Payments: $3,496 (+ $360 income/month)

Even if interest rates only drop by 1%, you still end up with over $4,000/year more in your pocket.

Similarly, because of the  shifting value, that initial $500,000 now has a value of $550,000 (10% higher than before).

If all you do is refinance when rates drop by 1%, you can easily build income and equity. Imagine the strides you can take when interest rates drop even further.

This same strategy applies to portfolio/multi-family homes. When rates drop, you can look into refinancing any investment property to explore these possibilities and take advantage of this opportunity to build generational wealth.

 

Read the full article here.

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How to Create Generational Wealth from High Interest Rates

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Fun fact: What the Fed is doing now will create more opportunities for generational wealth and income in the very near future.

Interest rates are currently high. This can create a discouraging market for new investors, but it’s important to look at the patterns of those interest rates so we can project where they’ll be over the next few years.

Real estate investing is one of the most accessible ways to create generational wealth. It takes two things to be successful:

  1. Leverage: knowing how to use other people’s money (bank loans, etc.) to turn a profit
  2. Math: know how the numbers work so you can use them to your advantage.

Even though interest rates are currently high, if we understand how to use leverage and math to our benefit, we’ll be creating wealth in no time.

It Comes Down to Numbers (and Interest Rates)

We’re all in real estate investing to create income, wealth, a better life. Interest rates are a significant aspect of that. We need to understand exactly how to leverage high interest rates to help you create the wealth you’re here for.

Here’s the good news: interest rates will likely go down soon.

If you buy a property when rates are high, you can refinance when rates drop to increase both your income and equity. 

For Example…

Let’s say you have a 4-plex that you’re going to purchase with the following figures:

  • 4-Plex (Initial Numbers)
    • Loan Amount: $500,000 
    • Interest Rate: 8.5% 
    • Monthly Payments: $3,800

As we said earlier, rates are likely to decrease soon. We’re heading into a big election year which tends to drop rates, and the Fed is hitting their apex. So what happens when the rates decrease and we look at refinancing?

  • 4-Plex (Refinanced!)
    • Loan Amount: $500,000 
    • Interest Rate: 7.5%
    • Monthly Payments: $3,496 (+ $360 income/month)

Even if interest rates only drop by 1%, you still end up with over $4,000/year more in your pocket.

Similarly, because of the  shifting value, that initial $500,000 now has a value of $550,000 (10% higher than before).

If all you do is refinance when rates drop by 1%, you can easily build income and equity. Imagine the strides you can take when interest rates drop even further.

This same strategy applies to portfolio/multi-family homes. When rates drop, you can look into refinancing any investment property to explore these possibilities and take advantage of this opportunity to build generational wealth.

Falling Interest Rates Generate Generational Wealth… If You’re Prepared.

If you buy when interest rates are high, you’re going to increase your income as rates fall. You’re also going to increase your net worth even if you don’t sell them. It’s a great way to create the income you need to begin a sustainable investment cycle. 

Also, this strategy also naturally lets you diversify lines of credit, cross liens, etc. that allow you to increase your portfolio.

Time to Buy

Here’s the bottom line: rates are going to fall, and if you buy now, you’ll build income without needing to invest in additional investments. 

This is the time to be buying investment properties.

We’re moving into a market where there’s going to be a lot of demand for properties. As rates fall, more people will be looking to buy. Get ahead of that rush, and use the dropping rates to put money in your pocket.

Resources

It’s important to keep your finger on the pulse as a real estate investor — especially if you’re serious about generating wealth. We have a weekly Investor Mortgage Report that keeps you updated on DSCRs, bank rates, private money, and market trends so you can be an informed investor.

Things change rapidly. Rates may rise through the end of 2023, but the moment they start to fall, you want to be prepared.

If you’d like to be put on the Investor Report email list, or if you have questions about how to get started as an investor, reach out to us at Mike@TheCashFlowCompany.com.

You can also check out our YouTube channel for more investment tips and tricks.

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2024 Real Estate Market Predictions

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What have we seen in 2023 and how does it inform our real estate market predictions for 2024?

When you’ve been in the real estate investing industry for as long as we have, you start noticing trends. 

2023 has been an interesting year for investors as we’ve faced exceptionally high interest rates. At times, this has been stressful, but how can we use this information to help us prepare for the next year of opportunities?

What Have We Seen in 2023?

High interest rates! 

Currently, rates are between 7% to a little over 7% for people looking to buy an owner-occupied property with a 30-year fixed mortgage.

According to Realtor.com, we’re also facing a shortage of homes for sale. Although there is high interest in buying single-family homes, there’s a shortage in the market. 

Affordability has also been a challenge for buyers and investors alike. All buyers need to afford and qualify for the mortgage in order to move forward.

All in all, it’s been a tough market for real estate. Smart investing has been more necessary than ever before.

2024: A Shifting Market

Demand

Moving into 2024, we’re going to see even more repercussions from the pent up demand from 2023. People want to buy homes, and the market is going to get competitive. 

Affordability Concerns

So many young adults are living with friends or family out of necessity. Multi-family households are increasingly common in response to affordability concerns.

As these adults get older, the desire to live in their own space will only get stronger.

Election Year Impact

Even though the Fed isn’t tied to either Democrats or Republicans, there’s always pressure on them to make sure the American people feel good about the housing market. 

Pay attention to how interest rates respond to election pressures.

Dropping Rates

The Fed has nearly reached their max which means lower rates are coming! And not just on housing; credit cards, student loans, etc. will all start seeing lower interest rates. 

Although it’s tricky to pinpoint exactly how low the rates will drop, our real estate market predictions are confident that lower rates are coming.

The Economics Behind the 2024 Market

As interest rates go down, you’ll have the opportunity to increase your cash flow just by refinancing or being smart with your purchases. 

The lower the interest rate, the more money goes into your own pocket in each deal.

But how does the math work?

If you’re looking at your finances, and you think you can afford approximately $2,000 for a monthly mortgage payment, here’s the breakdown:

  • In total, you can afford $2,000 a month in payments 
  • Subtract $100 for taxes
  • Subtract $100 for insurance
  • TOTAL: Investor can afford about $1,800/month that goes towards the mortgage

Now, let’s run that through different interest rates. 

Even though you can afford only $1,800/month towards a mortgage, the interest rate significantly changes the loan amount which in turn changes the types of property you can pursue:

Even a change from a 7% to a 6% interest rate results in an 11% increase in the price of a home you can afford. 

As interest rates go down, more people can access what’s on the market. 

If you’re in real estate investing, having homes ready to flip in 2024 to meet that pent up demand as interest rates drop can make a huge difference for you.

Make a Game Plan

Even though rates are still high, based on these evidence-based real estate market predictions, you should start buying and getting properties ready to flip by the end of this year.

Real estate markets move quickly, so you’ll want to be ready for those falling rates when the market demand spikes. 

If you’re wondering why should I buy when interest rates are so high? here’s the deal: If you buy right now when interest rates are high, you can cash flow them as rates fall. This makes your properties more valuable when you flip them, and cash flow is going to increase.

We’re Here to Help

As a real estate investor, you’ve got to keep up on interest rates. If you need somewhere to start, you can contact us to sign up for our weekly mortgage report. It comes to your inbox and tells you what’s happening in the mortgage industry that impacts you as an investor.

We’re also happy to answer any questions you have about preparing for this upcoming year. For questions or to sign up for our mortgage report, email us at Info@TheCashflowCompany.com.

Remember, prepare now to keep the money train rolling in 2024!

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