The Holiday Season was just a few weeks ago, but it sure feels like 2018 has taken off quite quickly. We had our first meetup this week to a packed house and are scheduled to have 4 events a month for the better part of the year. We would also like to congratulate 2 members who purchased homes in just the first weeks of the year. One tri-plex needing over $150K in renovations, and the other being much closer to turn-key property. Both investors are expected to have a return well above 20%+ annually as they move forward.
The Housing Market also had two major events happen in just the first 2 weeks of the year. January 1st hit with the implementation of new stress tests on qualifying for mortgages. So, If we qualified for say a 3% mortgage rate last year (to protect us from ourselves) the government has now said that we would have to qualify at 5% (even though our actual rate would still be 3%). This essentially means that in 2018 we would qualify for less home value, and also need to qualify at a higher amount of monthly expenses. Then almost immediately after the rate increases, interest rates also went up 0.25% in January, and this is coming off two rate increases just a few short months ago (total .75% increase since September), and guess what.. it could even happen again in April!
Is the sky is falling????
We always tell new investors, “How good an investor you are is best said in how well you handle all the challenges real estate investment can throw your way”. Its never a straight line to success, but lots of learning and patience to get through times when most would just walk away. This is why we purchase properties with so much buffer in our cash flow and financials to ensure we get a good double digit annual return (In most cases we look for the asset to make 20%+ annually).
Now, let’s get back to interest rates. Looking at the image, although we have had three rate increases in just a few short months, let’s compare interest rates since 1990…There is still a mountain to climb to get back to some of the rates in the early 90’s (yes, they were over 10%!) and less than a decade ago they were more than double what they are now. The little blip at the far right of the graph shows the last 3 rate increases; Even with the rate hikes, the cost to borrow money is still incredibly cheap!!
Our main point here is that people have been investing in Real Estate for centuries. It’s a known fact that the vast majority of millionaires built their wealth through real estate. Markets change, prices go up, rates increase, and we even have floods and unexpected repairs in our homes, but has that stopped investors from investing? Many do choose to not take action, try to time the market, or focus on one variable that they talk themselves out of investments that could change their lives. We have many come to us and tell us they don’t want to purchase because the housing market has gone up too much and prices are too high. If we had stopped investing because housing prices went up (yes even more than 10% a year) then we would not be bringing this blog to you, or even talking about real estate as an investment vehicle.
We preach Economics and Financials to everyone we work with. Know the long-term economics of where you plan to invest, and use proper assumptions using real numbers to analyze your cash flow and ensure your financials work. If you do plan to move forward with real estate investment, or even look to buy that next property, make sure you have those on your team that understand real estate investment and can help take you to the next level.
Visit us at www.VenturePropertyInvestments.com and our pages on facebook or LinkedIn to learn more about how we invest in real estate to profit in both an increasing or decreasing housing market. Or contact us if you would like to learn how we are providing double digit returns for our partner’s and clients year over year.
Until Next Time,
Build Wealth. Live Life
If you haven’t come out to one of our events, feel free to visit our events page on our site at https://venturepropertyinvestments.com/events/. If you are just starting out, or a seasoned pro, come out to Learn and Network with others like you.
Martin Kuev & Chris Shebib are full time Real Estate Investors, Realtors and Wealth Coaches who have over 20 year’ experience in Real Estate. With multi-million-dollar real estate portfolios and a team built over the past decade, they left the corporate world to have the flexibility to spend time with family, continue their own real estate investments and help others build long-term wealth.
Both Chris & Martin are first and foremost Husbands, and Fathers. Both are actively involved with their families and each have 3 daughters keeping home life full of surprises.