A Newbie’s First Big Lesson In Real Estate Investing
“DON’T BE AFRAID OF THE NUMBERS!”
By Phyllis N. Schwartz
Staff Writer
From the Trump Real Estate Expo In LA . to home prices reaching
unheard of highs. to the much awaited announcements from Alan
Greenspan - this great nation of ours is clearly in the throes of a
real estate frenzy.
There is talk about a “foreclosure gold rush” and speculation about
when the real estate “bubble” will burst . And it seems like anywhere you go these days, people are using real estate lingo.
There’s talk of bird dogging, short sales and flipping junkers. And what about lender seasoning and littoral rights - care to bet some earnest money?
Mostly what I overhear in my travels goes in one ear and out the other. But recently someone made a comment that wouldn’t leave my head:
“Interest rates don’t matter to real estate investors.” What exactly did that mean? I simply had to know.
Doing what any nosy rosy would, I pulled out my laptop
and googled it. I started with a search for “real estate investing.” When 7,870,000 listings came up,
I went to plan ‘B’ - straight to the experts. I
typed in “real estate investment programs” and the number of listings DOUBLED.
It wouldn’t have taken a genius to see that Real Estate investing is HOT, HOT, HOT! But that didn’t tell me anything about why interest rates don’t matter. So I did more research, signed up for a few programs and now I am armed with a notebook of new information.
Please note that I am not going to make any course recommendations.
What I will do, however, is share some of the incredibly valuable lessons
I’ve been learning . things that really surprised me . things that all
serious investors need to know.
Lesson #1:
It is absolutely true! Interest rates don’t matter to real estate investors.
It makes perfect sense and I will explain why. In fact, for many people, this is fantastic news. Because it backs up the claim that, in real estate investing, money and credit (or rather lack thereof) should not stand in anyone’s way.
In the words of Robert Kiyosaki. “You’ve got to get
out of your comfort zone!”
There are always ways to get money; from private lenders, credit lines, other investors, owner financing, partners. And, yes, to get private or bank money, you may pay 18% interest or even more.
But, when you know how to buy real estate the right way, you will still profit – and then quickly build on those profits. Don’t let the numbers scare you.
Negative credit is not the only reason to go with higher interest rates, either. Speed is another factor. With all the steps and paperwork involved, conventional mortgages take anywhere from 45 to 90 days to fund.
A private lender can complete a deal within 7 to 10 days.
That timing could make the difference between a great deal and no
deal at all.
Another Kiyosaki truism , " freedom means having more choices,
not security." Of course, having lots of money and good credit is
helpful.
But you can work around that in many different ways. And,
while you’re putting yourself out there and making money with your
investments, that bad credit can be turned to good.
The most important thing is not to let a high interest rate scare you away from a good real estate deal. With a higher interest rate, you can still net a nice profit. And, even if your margin of profit is small the first time out, the next deal is just around the corner.