- You can make a lot of money! This is Probably the most obvious…and the one we hear about the most at Ali Safavi Real Estate. I don’t think we would be in this if there weren’t money to be made. This is a cool one, though, as there are actually different styles of making money in real estate. You can make big chunks in shorter amounts of time with flipping, or you can make passive money over the long run with rentals.
- You can’t get fired. You can quit, but you can’t get fired. Kind of freeing, isn’t it? Even if you mess up so bad even your mother would want to slap you, you can’t get fired. If that’s not empowering, I don’t know what is.
- You can do it anywhere, anytime. Wherever you are, some kind of investing will work. It may not necessarily be the most optimal, but you can do something. With our virtual world, you can handle rental properties in one area from anywhere else in the world. My properties are in Atlanta; but I’m not usually there, or anywhere near it, and I can still manage my investing. Thank you, Internet. You can even handle flips from far away–not as easily, but still doable.
- Hello tax write-offs! There’s nothing like sticking it to Uncle Sam than taking back some of your tax money. Tax benefits vary with every style of investing. Rental properties have better tax benefits than flipping; but regardless to what extent each project gets your taxes back, it’s one of my favorite parts of real estate investing. Ever since I started buying rental properties, my tax returns have been 3-6 times what they used to be!
- There are some seriously cool people in the industry.I remember the first investors’ weekend I attended in Nicaragua. It was the first time I felt like I was with a big group of people who were the perfect combination of smart and fun. I mean, if you’re in Nicaragua, you clearly have a sense of adventure which makes you more fun by default. But it was the investor aspect that really stuck out. Investors are usually pretty smart in one form or another, but they are also working towards a common goal which is a better life through finance. They want to have more fun and enjoy life.
- It is a means to anything you want. Real estate investing gives you the financial resources to do whatever it is you want to do. Some people just desire a more secure retirement fund. Some people want to stop working completely. Others want extra income to fund activities, adventures, savings accounts, toys, fancy dinners, or whatever. It might be a new lifestyle design. Whatever it is, you can find a way to fund it. I want to be financially free (who doesn’t), but my rentals haven’t gotten me that far just yet. But while I wait, real estate investing has given me the opportunity to start my own company, allowing me to have full lifestyle. I’ll take it!
- There is something for everyone. It doesn’t matter if you are left-brain or right-brain in orientation, old or young, smart or not, outgoing or shy, or a convicted felon – there is always something you can do. There are so many routes you can go in real estate investing; you can absolutely find something you mesh with if you look hard enough. You can even be a part-time investor or a full-time one, or like me, a no-time real estate investor. Any any end of the spectrum of personality and desires or goals, you can find a fit.
- You get to be your own boss.How often do you get the opportunity? You’d have to start your own business or be a freelancer. In real estate investing, you call the shots! (Or if you don’t want to, you don’t have to. See point #7). As I said, you can only quit — you can’t get fired — and you make your own rules, decisions, and structure your work the way you want. You don’t have to answer to anyone!
- It’s an investment you can actually control. You can always hire a different person; you can always change a paint color; you can add space to properties; you can get new tenants; you can find more advantageous financing; you can get rid of properties; you can buy different properties; you can change markets, and you can come up with cool partnerships. Among a ton of other ways, you can control whatever it is you are working on.
- There are websites to help you! As I mentioned, real estate investors are a pretty cool crowd of folks to meet and network with. They are often very willing to help out a fellow investor. Between the forums, the podcasts, and the blogs, it’s very obvious that there are a lot of people out there ready to assist.
How Mortgage Rates Affect Your Wallet
Have you ever stopped to think how much interest rates affect your life? Credit cards, bank accounts, cars, homes, loans – they all grow or shrink in price depending on the interest rate. For most of us, mortgage rates are going to be where we feel this the most. Just a one percent change can mean a boatload of money. If you know that, then you know now is the right time to buy. Here’s some simple math from Ali Safavi Real Estate to help you understand the numbers.
Today, a typical home buyer can get a 30-year fixed mortgage rate for 4.3%. That means if you buy a $250,000 home your month mortgage payment including principal and interest would be $1,237.18. If you’re thinking 4.3% seems high, you’re wrong. Over the past fourty years the average 30-year fixed rate mortgage was around 8.7%. Today you are paying half that!
Interest rates are expected to rise. So every month you wait to buy you risk paying a lot more for the same home – especially since home prices are increasing as well. So next year that same house may cost you $260,750 with 5.1% interest, which grows your monthly mortgage payment to $1,415.74 per month. Over the lifetime of the load you will page an additional $,5,256. If you are like Ali Safavi Real Estate and life in California, you know you’re not getting a home for anywhere near $260,000. The more expensive the house, the more that number is going to grow from $5,000 to $10,000 to…well you get the point.
How will you know if interest rates are going to rise? First of all, they will. Secondly, you can probably watch any business news network and they’ll give you that insight. Or, if you are more of a do it yourself kind of person, you can follow the 10-Year Treasury note. When treasury yields rise, so do interest rates. Home loans and corporate bonds area all affected to together because they compete for the same type of investor.
If rates increase by just one percent, a buyer will lose 10.75% of their purchasing power. That means if this year you can afford a $600k home, next year that will drop to. $535,500. This means buy now! Of course this may not be an option for all of you, but if you’re close make sure to survey all your options. There is more than one way to secure enough money to get a down payment. You could also consider looking outside the city for a cheaper home. The hesitation you feel now will only get worse when the exact same house costs more money next year.