3 Reasons To NOT Buy In a Down Market
3 Reasons To NOT Buy In a Down Market by Kurt Wannebo Let's talk about three reasons why you should NOT buy a property in a down market. First, if you're considering buying a property for a short period of time, meaning two years or less, it may not be ideal because the market may go down and it would be worth less than what you paid for it. So don't consider anything short term in a down market. The next thing or the next reason you shouldn't buy is if you already own a property and you relatively like your property, it's just one or two things that are missing that you were considering buying another and then maybe stay there and fix yours up. I run into people who say, Well, we want to sell our home and go buy another with a pool. We'll, consider staying in your current property and adding that pool. Sometimes even we just need an extra bedroom look into maybe adding a bedroom or adding some additional square footage would be might be a better investment than selling your property with a low interest rate today and moving forward and buying something else with a higher interest rate. The last reason you absolutely should not buy a property in a down market is you're a head case. And what I mean by that is I run across people all the time who say I only want to buy at the bottom of the market. I'm going to buy when we hit the bottom. And the reality is, you know, the last real estate cycle when we hit the bottom in March 2009, only 2700 people actually bought a property during that month and at the bottom. But the reality is there are millions of homeowners who have made a ton of equity and a lot of money out of real estate, even though they didn't buy in that one month. I personally bought a property in a down market and today it's worth three times what I paid for it. And I have a tremendous amount of positive cash flow rental income, which I would have never had if I hadn't bought in a down market.
3 Reason to Buy in A Down Market
3 Reason to Buy in A Down Market by Kurt Wannebo I'm Kurt Wannebo, and I'm going to talk about three reasons why you should buy a property in a down market. I've been in this business almost 20 years, and no matter what the market's doing, buyers have concerns whether they should buy or not, whether the market's going up. They're worried about overpaying or if the market's going down. They're worried about their property being worth less than what they paid for it in a period of time. So let's get to the three reasons. Number one, if you're renting, buying a property is better than renting for three reasons. One, each month you're going to make a payment and that's going to lower your principal, which is building equity. You're basically paying yourself each and every month, even though you're paying a mortgage payment. Some of that's going back into like a bank account in the form of equity. Next, you're going to get a tax write off for the interest that you're paying each and every year. And then the third reason is simply based on the premise that owning a property affords more stability than renting. If you're renting, you may have a lease for a year, but you never know if the landlord's going to, you know, raise the rent the next year or if they're going to decide to sell it and kick you out or they don't like you. So they're going to kick you out and get another tenant. Owning a property gives you that stability. You know, where you going to live for a period of time. You're in control and your payments are traditionally going to be set for a long period of time. Now, the next thing that I talk to buyers about, if they're considering buying in a down market, if you're going to live in this property for a long period of time, it doesn't matter what the market's doing. If you're considering staying there for five or seven or ten years, then we have no idea what the market's going to be doing at that time. So as I always like to share a story about myself, I bought one of my first properties here in San Diego. Two years later, it was completely upside down and worth $200,000 less than what I paid for it. But I was in control and I didn't sell the property. I still own that property today and it's worth three times what I paid for it and I turn it into a rental property so I make money each and every month as a supplemental income. So if I had been worried about the market going down, I wouldn't have been afforded that equity and opportunity. The last thing I tell people that are considering buying in a down market, you really need to think about how is this going to affect your quality of life. For some people, I talk to buyers there in a two bedroom condo and they have a couple of kids and now they're bought. The husband and wife are working from home and they just need more space. And if they were to buy a property and be there for a period of time, that would change their life drastically. Instead of worrying about what the market's going to do over the course of the next year or two. Focus on your quality of life. So those are three very specific reasons and why you should buy in a down market.
What is a bridge loan?
What is a bridge loan? by Kurt Wannebo One of the questions I've been running into more and more from homeowners today Is: “ Are there Bridge loans out there?” “What are they?” “How do they work?” And it's interesting because for some of my older demographics they're very familiar with Bridge loans. Because they used to be around in the 70s and 80s and even early 90s. But really haven't existed much in the 2000s. and so in essence I wanted to go through what a bridge loan is and some of the benefits or downsides of utilizing one. So again one of the problems that I'm seeing with sellers is they're wanting to sell their home and go out and buy a new one. But the inventory is very low here in San Diego County right now. And what that means is there's not a lot to choose from and they're not necessarily always liking all of the properties they see out there. And they're wondering how long is it going to take for me to find that next property? Also they have to sell their property or unlock the equity that they have in it in order to buy the new home. So what a bridge loan does is it steps in and what that allows you to do is keep and own your own home, go out and find the new property first on your timeline. And when you're ready and when you find something this bridge loan will allow you to buy the property based off of the equity you have in your current home. Once you get that loan, the bridge loans temporarily move into the new home you sell your old home. And when you unlock that Equity you roll over and refinance into permanent financing for the new home. Now there are some pros and cons to a bridge loan. The pros obviously is it gives you that luxury of taking as much time as you need to find that perfect property. And not worry about selling yours and you know you have to find a temporary Home. The downside is sometimes they are higher interest rates, because it is a temporary loan and they're incurring some risk based on the premise that you still need to sell your property. But nonetheless it's been a great resource for many of our clients who are concerned about this low inventory and concerned about selling their home before they find the right property out there for themselves. So if you want to hear more about these options and if they're right for you we have access directly to these lenders who are doing these Bridge loans today. Give us a call. We'd be happy to give you a consultation and walk you through the process.
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