35) Is Now a Good Time to Buy Real Estate? & Should I House Hack?

Real Estate Investing with House Money

House Money Weekly

In this week’s House Money Weekly segment, Lauren and Alan get together with their special guest, Tiffany Grant, and they discuss blog 133, Is it always a good time to buy real estate? Alan has always been accused on social media that he always says it's a good time to buy real estate because he’s a realtor. Although realtors always want you to buy real estate, Alan created this blog to answer why that's not the case. Many people are waiting for interest rates to drop, a larger down payment or whatever the reason. What they don't realize is these reasons make it more difficult for them to buy in the future. The first reason why it is always a good time to buy real estate is because your cash flow is more important than the property’s value. Cash flow is all the income you make minus all the expenses. Most people say that one roof replacement is going to ruin your cash flow, but the truth is budgeting for the capex, or the vacancy is part of your expenses then whatever is left over is your cash flow. The beauty of being a real estate investor is that if you can find a cash flowing property, your expenses are pretty much locked in for 30 years and although your insurance and your property taxes are going to take up a little bit, your rent is still going to go up. So. it's always a great time to buy real estate, as long as you can buy cash flowing properties. Lauren asks: How much does Alan try to cash flow per door? Alan always teaches in the House Money Media courses that when starting out, $200 is probably a good rule of thumb and once he gets his hands on it, he thinks of ways on how he can turn that into $300 or $400. Although Tiffany is not a realtor or real estate investor, she thinks that if you have the money and you have everything you need to buy the property, then go for it because you’ll never know what’s going to happen. Another reason is the 30-year mortgage is a great inflation hedge. If you can lock your biggest monthly expense for 30 years that will be a huge benefit to building wealth. If you’re hung up on interest rates, remember that interest rates may go higher, and you’ll be glad you are locked in. Or they may go up and you can refinance. Or they may stay the same!

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Mortgage Minute: Jasmine answers the question: What are my options if I don't have a large down payment?

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Real Estate Is Easy Interview

Lauren interviews Brendan Bennett, an investor in the Cleveland, Ohio, market. He also works in the sales department for a hard money lender called “Upright.” His portfolio consists of 11 properties which are a mix of long-term, mid-term, and short-term rentals. Lauren asks Brendan what house hacking is and for him, house hacking is when you get benefits of real estate investing through a property that you’re going to live in. House hacking can take on a lot of different forms. It could mean that you’re living in the property while renting it or you’re buy the property with an intent to rent it one year later. These strategies are done by Brendan personally and the benefit of that is you’re getting the same advantages of a real estate investor with the house you live in. Lauren and Brendan also share various ways some ways to house hack. A lot of these ways can be applied to midterm, short-term or long-term. Lauren asks Brendan why should anyone house hack? For Brendan, it is real estate investing using training wheels. Brendan shares that having the right mindset with investing is the biggest thing that’s holding people back. And if you are the type of person that doesn’t want tenants next to you but still wants to house hack, there are still many options for you. “The most comfortable is probably the least profitable and the least comfortable will be the most profitable” (idea from Craig Curelop’s book). Lauren elaborates the training wheels idea by sharing an idea that you can try it out and never do it again if you don’t like it. Lauren asks: is there anyone that shouldn’t house hack? For Brendan, it is someone who is in a lot of personal debt that they are not yet in a financial position to buy a house. And lastly, Brendan makes Real Estate easy by understanding the “who” and not the “how.” Lauren, Alan, and Tiffany then discuss Brendan’s answer.

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Vyzer Wealth Building Break: Litan answers the question: What do rich people think about diversification?

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Guest Host's Segment

Guest Host Tiffany talks about her home buying journey, and how it relates to budgeting. She only has one door and that’s her primary but when she was going through the process, she realized that the one thing that is important is cash flow. Knowing your cash flow every month helps you know how much you can truly afford. She wasn’t looking for a house but because she knew how much she could afford and what her cash flow was, she got the offer for her house in just a week.

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