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Is it a Good Time to Buy a House or Should I Wait Until 2023-2024

February 2, 2023 by Marco Santarelli

Is It a Good Time to Buy a House

Is it a Good Time to Buy a House or Should I Wait?

Is it a Good Time to Buy a House

Check out the latest housing trends for the previous month if you're unsure whether it is a good time to buy a house or if should you wait until the end of 2023. It’s becoming harder to buy a house as prices are up year over year, and mortgage rates are soaring. At the same time, consumer prices on everything are also on the rise making it even more difficult to save money to buy a house next year.

In an effort to tamp down inflation, the Federal Reserve is raising interest rates. The Federal Reserve raised the target range for the federal funds rate by 75 bps to 3.75%-4% during its November 2022 meeting. It marks a sixth consecutive rate hike and the fourth straight three-quarter point increase, pushing borrowing costs to a new high since 2008. The decision came in line with market forecasts.

Policymakers also said that ongoing increases in the target range will be appropriate and that they will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments when deciding on the size of further increases.

The message could signal a smaller rate hike in December but during the press conference, Chair Powell also noted the ultimate level of interest rates will be higher than previously expected. The Fed aims to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2%, which remains elevated around 40-year highs.

The cumulative effect of these sharp rate increases has cooled the housing market and caused the economy to slow, but has done little to lower inflation. Although Fed doesn't control mortgage rates it has a ripple effect on the mortgage industry. The recent rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing. On the flip side, higher interest rates also mean savers will earn more money on their deposits.

However, since December data indicates that inflation is moderating, the Fed has signalled that future rate hikes will be more gradual and may even end once rates reach just above 5%. The Case-Shiller Index reveals that home prices are falling month-over-month, but are still elevated compared to a year ago. Possibly as a result of these alterations, a greater number of prospective homebuyers believe the affordability crunch will ease. However, if their optimism leads to an increase in demand, prices may increase once more.

<<< Will the Housing Market Crash? >>>

Is it a Good Time to Buy a House or Should I Wait?

Will the 2023 year-end be a good time to purchase your first house? According to the Fannie Mae Home Purchase Sentiment Index, which has recovered slightly from its all-time low in October, prospective homebuyers are becoming a little more optimistic that mortgage rates will decline, and a larger proportion of them believe now is a good time to purchase a home.

More than 100 questions were posed to approximately 1,000 homeowners and renters regarding their perspectives on home buying and the economy. At the lowest point of the Home Purchase Sentiment, only 16% of respondents believed it was a good time to purchase a home. In December 2022, however, 21% of respondents indicated that it was a good time to buy real estate. In December, the proportion of respondents who said it was a poor time to buy decreased from 79% to 76%.

“In December, the HPSI inched upward slightly, as consumers reported increased expectations that mortgage rates and home prices may decrease over the next year – perhaps reflecting recently observed declines in mortgage rates and average home prices,” said Doug Duncan, Fannie Mae Senior Vice President, and Chief Economist.

Fannie Mae's Home Purchase Sentiment Index (HPSI) increased in December by 3.7 points to 61.0. The HPSI is down 13.2 points compared to the same time last year. Three of the index's six components improved month over month, including those associated with homebuying conditions, mortgage rate outlook, and job security.

Is it a Good Time to Buy a House?

The percentage of respondents who say it is a good time to buy a home increased from 16% to 21%, while the percentage who say it is a bad time to buy decreased from 79% to 76%. As a result, the net share of those who say it is a good time to buy increased by 8 percentage points month over month.

Is it a Good Time to Sell a House?

The percentage of respondents who say it is a good time to sell a home decreased from 54% to 51%, while the percentage who say it's a bad time to sell increased from 39% to 42%. As a result, the net share of those who say it is a good time to sell decreased by 6 percentage points month over month.

Home Price & Mortgage Rate Expectations

The percentage of respondents who say home prices will go up in the next 12 months remained unchanged at 30%, while the percentage who say home prices will go down increased from 34% to 37%. The share who think home prices will stay the same decreased from 30% to 29%. As a result, the net share of those who say home prices will go up decreased by 3 percentage points month over month.

The percentage of respondents who say mortgage rates will go down in the next 12 months increased from 10% to 14%, while the percentage who expect mortgage rates to go up decreased from 62% to 51%. The share who think mortgage rates will stay the same remained increased from 24% to 31%. As a result, the net share of those who say mortgage rates will go down over the next 12 months increased 15 percentage points month over month. Read the full research report for additional information.

Is It a Good Time to Buy a House or Wait Until 2023?
Source: Fannie Mae

The HPSI is constructed from answers to six of 100 national housing survey questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions.

As of January 26, 2023, the average rate for the benchmark 30-year fixed mortgage is 6.43 percent, up 7 basis points from a week ago (source: Bankrate). A month ago, the average rate on a 30-year fixed mortgage was higher, at 6.61 percent. At the current average rate, you'll pay a combined $627.47 per month in principal and interest for every $100k you borrow. That's an increase of $4.58 over what you would have paid last week.

The average 15-year fixed mortgage rate is 5.65 percent, up 2 basis points over the last week. Monthly payments on a 15-year fixed mortgage at that rate will cost around $825 per $100,000 borrowed. The larger monthly payment may be harder to fit into your budget than a 30-year mortgage payment, but it has huge advantages: You'll save several thousand dollars in interest and create equity much faster.

Let's compare the figures between now and twelve months ago when the buyers financed their houses with a mortgage. On a $300,000 loan, a 30-year, fixed-rate mortgage at December 2021's rate of 3.11% would have meant a monthly payment of about $1,282 (Principal & interest).

  • Loan amount = $300,000
  • Total interest paid = $161,923
  • Total cost of loan = $461,923

Today’s rate of 6.43% (30-year) brings the monthly payment to $1,882 (Principal & interest). That’s an extra $600 a month or $7,200 more a year and $216,049 more over the lifetime of the loan.

  • Loan amount = $300,000
  • Total interest paid = $377,972
  • Total cost of loan = $677,972

The Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group revised downward its forecast for total home sales growth through 2023. They now project 2022 total year existing sales by 13.3 percent in 2023. The group expects purchase volumes to fall about 1.5 percent in 2023 to just under $1.7 trillion, a downward revision of $17 billion from last month’s forecast, driven by downward revisions to their forecast for home sales.

The rise in rates is having the Fed’s desired effect on housing, as house price growth began to slow in June. They expect the slowdown in housing to continue through 2023 as affordability constraints mount for potential homebuyers, considering, too, that refinance activity has been significantly curtailed by the rise in mortgage rates.

The group continues to anticipate a strong deceleration in home price growth going forward due to the lagged effects of higher mortgage rates and the slowing economy weighing on purchase demand. If the economy suffers a downturn, mortgage interest rates will very probably fall to about 4% or even lower. If it does, this could be a good time to put off buying a home and save some money, especially for first-time buyers.

The Mortgage Bankers Association was somewhat more optimistic about mortgage rates, projecting that the average rate will increase to 4% by the end of 2022. It is now evident that neither Fannie Mae's nor the Mortgage Bankers Association's predictions were even somewhat accurate. Although the Federal Reserve does not control fixed mortgage rates, its actions have pushed them significantly higher.

The Federal Reserve is likely to continue raising interest rates, which could result in additional mortgage rate increases. On the other hand, if the Fed's actions result in a recession, mortgage interest rates could fall. Therefore, it is nearly impossible to predict the future of mortgage rates in 2023.

As a borrower, it makes little sense to attempt rate timing in this market. Regardless of current interest rates, our best recommendation is to purchase a home when you are financially ready and can afford it. Remember that you are not forever bound to your mortgage rate. If interest rates drop significantly, homeowners can refinance to save money at a later date.

Rising rates make homes more expensive for buyers, and, for prospective borrowers, steeper monthly mortgage payments. It will thereby reduce the demand for home purchases. Mortgage credit availability decreased in December according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from ICE Mortgage Technology.

The MCAI fell by 0.1 percent to 103.3 in December. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI decreased by 0.1 percent, while the Government MCAI decreased by 0.1 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 0.2 percent, and the Conforming MCAI was unchanged.

Mortgage credit availability
Source: Mortgage Bankers Association

The competition for housing results in fewer options, higher prices, and faster sales. In a seller's housing market, there are more interested buyers than available homes and that makes it difficult time to buy a house, especially for first-time buyers. According to the NAR, the national median price for existing homes sold in October was $366,900, which is slightly lower than November's median price but still up 2.3 percent compared to December 2021. This is the longest streak of year-over-year growth ever recorded, spanning 130 months.

“Home prices nationwide are still positive, though mildly,” Yun added. “Markets in roughly half of the country are likely to offer potential buyers discounted prices compared to last year.”

Is it a Good Time to Buy a House for First-Time Buyers?

According to a recent Fannie Mae survey, many consumers were hesitant to buy a home in December 2022. About 51% of survey respondents expect mortgage rates to increase, and there are rising concerns about job stability and escalating housing prices. Some homebuyers will find the current market conditions easier, while others will find them more difficult to buy a house. The current upward trend in home prices is likely to continue throughout the year, which could price out some prospective buyers.

However, it is anticipated that prices will continue to rise at a slower rate in 2023. The percentage of respondents who say home prices will go up in 2023 (in the next 12 months) remained unchanged at 30% in December. The current lack of entry-level supply and the rapid increase in mortgage rates appear to be negatively impacting potential first-time homebuyers in particular, as evidenced by the larger proportion of younger respondents (aged 18 to 34 years old) who believe it is a bad time to buy a house. The advantage of the historically low mortgage rate environment of 2020 and 2021 appears to have diminished for first-time homebuyers, and affordability is projected to become an even greater constraint for them in the future.

In December 2022, first-time buyers were responsible for 31% of sales,  up from 28% in November and 30% in December 2021. According to NAR, the annual share of first-time buyers was 34% in 2021. Individual investors or second-home buyers, who make up many cash sales, purchased 16% of homes in December, up from 14% in November but down from 17% in December 2021.

In 2022, rising mortgage rates were piled onto record-breaking home prices, locking even more potential buyers out of the red-hot housing market. Historically, rising interest rates cause more prospective buyers to delay purchases, and the recent increase in financing terms has already resulted in a decline in mortgage applications.

The prices are not going to crash in 2023. The various forecasts from experts show that 2023 will remain a moderate housing market, and home values are estimated to either remain flat or increase by single-digit percentage points. While affordability concerns continue to grow, low mortgage rates, increased savings, and a strengthening job market all contribute to making homeownership more accessible to a wide number of prospective buyers.

Realtor.com’s November 2022 housing data shows that the housing market continued to cool, with inventory, time on the market, and listing price growth falling below 10% for the first time in a year. This gradually cooling market is advantageous for homebuyers because they may have more options and more time to make a purchase decision.

The slight increase in the year-over-year decline in pending home inventory compared to the previous month may indicate that the market is stabilizing after pending listing declines worsened for 11 consecutive months. In the coming months, the housing market will continue to be influenced by the direction of inflation, mortgage rates, and overall economic growth.

The national median list price declined to $400,000 in December, down from a record high of $449,000 in June (-11.1%). This represents a yearly growth rate of 8.4%, which is lower than last month’s growth rate of 11.0%. This is the first time that listing price growth has fallen below double digits since December 2021.

There were 54.7% more homes for sale in December compared to the same time in 2021. This means that there were 244,000 more homes available to buy this past month compared to one year ago. While the number of homes for sale is increasing, it is still 38.2% lower than it was before the pandemic from 2017 to 2019. This means that there are still fewer homes available to buy on a typical day than there were a few years ago.

Housing Markets that saw the largest year-over-year increase in listing prices in December:

  • Milwaukee, where the median listing price grew by +46.2%
  • Memphis, where the median listing price grew by +34.0%
  • Miami, where the median listing price grew by +20.4%

Housing Markets that saw the greatest increase in their share of price reductions compared to last year:

  • Phoenix (+17.3 percentage points)
  • Austin (+15.5 percentage points)
  • Tampa (+15.3 percentage points)

Conclusion: The Best Time To Buy A Home Depends On You

Higher interest rates pose a challenge to existing homeowners looking to buy a new home at the same time as selling their current home. Existing homeowners may benefit from lower interest rates than those offered right now because they already have mortgages. Their monthly expenses could rise dramatically as a result of the purchase of a new property.

In other words, if you don't have a specific date in mind for when you want to buy a new property, you may be better off waiting till it does. Every potential buyer's best time to buy a property is different, and the greatest time to buy a house is not the same for everyone. It’s essential to consider your financial situation and understand how buying will impact your bottom line each month.

For many first-time homebuyers, it doesn't matter if loan rates are too high, if there aren't enough homes available, or if you don't have enough money in the bank. When the time is right to purchase a home, the time is right. First-time buyers can accomplish the American Dream of homeownership without a 20% down payment. The government offers several mortgage schemes with minimal or no down payment, as well as down payment assistance programs.


Sources:

  • https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-survey
  • https://www.realtor.com/research/december-2022-data/
  • https://www.bankrate.com/mortgages/todays-rates/
  • https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales
  • https://www.bankrate.com/mortgages/rate-trends/
  • https://www.mba.org/news-and-research/research-and-economics/single-family-research/mortgage-credit-availability-index-x241340

Filed Under: General Real Estate, Getting Started, Housing Market, Real Estate Investing Tagged With: Housing Market, is it a good time to buy a house, Real Estate Investing, should i buy a house, should i buy a house now

Mortgage Interest Rates Forecast, Predictions, Trends 2023

January 31, 2023 by Marco Santarelli

Mortgage Interest Rates Forecast

Mortgage Interest Rates Forecast 2023: Will Rates Drop?

Mortgage rates have risen since the start of last year, reflecting investors' concerns that the economy is heating up and that the Fed will cool it down and reign in inflation. U.S. Treasury bond rates, which mortgage rates follow, encountered two tough patches this year: in late February, when Russia invaded Ukraine, and in mid-May when investors worried about poor consumer spending. Bond yields and mortgage rates declined throughout these times.

The Federal Reserve does not determine mortgage rates, and the central bank's choices do not have the same direct impact on mortgage rates as they have on other products such as savings accounts. The Fed does, however, determine borrowing costs for short-term loans in the United States by changing the federal funds rate. The federal funds rate can have an impact on 10-year Treasury bond yields, which are used to calculate most mortgage rates.

Essentially, the Fed does not set mortgage rates directly, but its policies can affect the financial markets and movers who do. Most analysts predict that mortgage rates will continue to rise given the inflation numbers continuing to increase. Since mortgage rates are tied closely to the performance of the 10-year Treasury market plus a margin to account for the additional riskiness of home lending. The long-term mortgage rates are expected to rise due to the overall turmoil in the world’s economy.

Also Read: How To Invest in Mortgage Estate Notes?

The mortgage market has seen a surge in activity with a 27.9% increase in mortgage applications in the week ending January 13th, 2023 according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. Refinance activity has risen 34% from the previous week, while the Purchase Index has increased by 25%. Despite this growth, refinance activity remains 81% lower than in the same week last year and purchase activity remains 35% lower.

Mortgage rates have now reached their lowest level since September 2022, about a percentage point below the peak rate last fall. The spring buying season is about to begin, and lower mortgage rates and an increase in the number of homes on the market will benefit first-time homebuyers. In the week ending January 20th, refinance applications rose 14.6% and home purchase applications rose 3.4%.

Despite the increase in demand, compared to last year, refinance activity is still 81% lower, and purchase activity is down 35%. The average 30-year fixed mortgage rate is currently 6.13% after steadily decreasing over the past three weeks. Forecasts for mortgage rates in 2023 vary, but December's inflation data suggests the Fed's efforts are working. The consumer price index could continue to fall, leading to a decrease in mortgage rates in 2023.

However, services inflation has increased, and the Fed has indicated that it will continue with rate hikes, though slower 25 basis point increases are expected. Despite uncertainties, economists are optimistic that the Fed will get inflation under control without causing a recession. Unemployment remains low, and there are more job openings than unemployed Americans, even as rate hikes are causing a contraction in economic activity and inflation begins to slow.

According to the U.S. Department of Housing and Urban Development, the national median family income for 2022 is $90,000, and the median price of an existing home sold in December was $366,900, according to the National Association of Realtors. Based on a 20% down payment and a 6.42 percent mortgage rate, the monthly payment of $1,840 is equal to 25% of the average family's monthly income.

The median family income was $79,900 a year ago, the median home price was $364,600, and the average mortgage rate was 3.4 percent. Buying a typical home back then required only 19% of a family's monthly income. In conclusion, mortgage demand has increased in recent weeks, but activity is still below last year's levels. Mortgage rates have reached their lowest level in months, and economists are optimistic about the future of the housing market.

Nevertheless, uncertainties remain and forecasts for 2023 vary. High mortgage interest rates imply you pay more interest, which can lower your purchasing power because you can't borrow as much money. This is because less money will be paid toward the principal (the amount borrowed) and more money will be paid toward the interest. Higher interest rates may assist in reducing the housing demand that is now driving up prices. If you're looking to buy a home, keep an eye on the local market and consider locking in your rate when you're ready to go.

It's also important to remember that just because you qualify for a certain amount doesn't imply you should borrow the maximum. Spend some time calculating how much house you can afford, including monthly payments. Work with your lender to calculate your monthly mortgage payment based on different loan amounts and interest rates.

Mortgage Rate Predictions 2023

Mortgage experts see rates decreasing over the coming year as the economy slows. Lawrence Yun, the chief economist of the National Association of Realtors, said he expects rates to fall to 5.5 percent by mid-2023. Fannie Mae sees the average rate of a 30-year fixed getting to 6.8% in 2023. Meanwhile, the prediction from Freddie Mac is 6.4%.

According to an updated prediction from the Mortgage Bankers Association as well, mortgage rates are also anticipated to fall in 2023, MBA economists also predicted that the United States would enter a recession in the first half of next year, owing to tighter financial conditions, reduced business investment, and slower growth globally. According to their mortgage rate prediction, this will raise the unemployment rate from 3.5% to 5.5% by the end of 2023.

“Next year will be particularly challenging for the US and global economies,” said Mike Fratantoni, chief economist and senior vice president for research and industry technology. “The sharp increase in interest rates this year – a consequence of the Federal Reserve’s efforts to slow inflation, will lead to an equally sharp slowdown in the economy, matching the downturn that is happening right now in the housing market.”

However, the good news for homeowners is that mortgage rates are projected to fall next year, according to Fratantoni. According to MBA, mortgage rates will conclude in 2023 at roughly 5.4%. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage is currently 6.94%. Fratantoni warned that mortgage rates will remain volatile in the coming months because the Fed is projected to continue raising interest rates this year.

According to the forecast, the Fed's continuous attempts to contain inflation will eventually limit homebuyer demand for mortgages in 2023. Mortgage origination volume is expected to decline to $2.05 trillion in 2023 from the $2.26 trillion expected in 2022, according to MBA. The forecast calls for purchase mortgages to drop by 3% next year, while refinance volume is anticipated to decline by 24%. The slowdown in housing activity and higher mortgage rates will cut the pace of home price growth, according to MBA. The forecast projects national home prices to be roughly flat in 2023 and 2024.

Will Fed Increase Interest Rates in 2023?

Fed officials predicted in December that rates would rise to just above 5% in 2023, then remain high throughout the year. However, incoming data will determine how high the Fed raises rates in 2023 and how long it keeps them there.

Let's look at the timeline for the Fed raising its benchmark interest rate in 2022. In March 2022, it raised its federal funds benchmark rate by 25 basis points to a range of 0.25% to 0.50%. The Fed raised interest rates for the first time since 2018. The Federal Reserve announced in early May 2022 that it would raise the federal funds rate target range to between 0.75% and 1%.

FOMC Meeting Date Rate Change (bps) Federal Funds Rate
Dec 14, 2022 +50 4.25% to 4.50%
Nov 2, 2022 +75 3.75% to 4.00%
Sept 21, 2022 +75 3.00% to 3.25%
July 27, 2022 +75 2.25% to 2.5%
June 16, 2022 +75 1.5% to 1.75%
May 5, 2022 +50 0.75% to 1.00%
March 17, 2022 +25 0.25% to 0.50%

The Federal Reserve has announced that it will sell Treasury and mortgage-backed securities in order to reduce the size of its balance sheet. To combat the sustained rise in inflation, the Fed raised the interest rate by 75 basis points, or 0.75%, in June 2022. This increase pushed the target rate range up from 1.5% to 1.75%, the largest single rate increase since 1994.

Following the release of the Consumer Price Index, which showed annual inflation of 9.1%, the Fed raised interest rates by 0.75% to a target range of 2.25% – 2.5% in July. Fed officials have stated that they want to see several month-to-month inflation rates annualize to less than 3% before becoming less hawkish and considering a pause in rate hikes. Treasury yields have risen across the yield curve, with the two-year rate rising by up to 21 basis points to around 3.78%, the highest since October 2007.

This is expected to reduce inflation, but it will also likely raise interest rates for borrowers. With inflation remaining stubbornly high, the Federal Reserve raised the target range for the federal funds rate by 0.75% in September, to 3%-3.25%. The Federal Reserve also released median forecasts, indicating that the target rate will be 4.4% by the end of 2022.

During its September meeting, the Fed raised the federal funds rate by 75 basis points to the 3%-3.25% range, the third consecutive three-quarter point increase, pushing borrowing costs to their highest level since 2008. It increased interest rates once more in November, bringing the federal funds rate to a range of 3.75% to 4%.

On Dec 14, 2022, the Federal Reserve raised the federal funds rate by 50 basis points, a reprieve from several other higher rate hikes in 2022. When you call a 50-basis-point rate increase a reprieve, you know the bar has been set low, but that's what seven Fed rate hikes in a year will do to a country. In order to keep inflation under control, the Federal Reserve raised the federal funds rate by 75 basis points four times in 2022, following two smaller increases.

Increasing the fed rate makes credit more expensive for consumers and businesses, and it is one of the Fed's only tools for combating inflation. The final increase for the year came on December 14, 2022 (+50 bps), mirroring the increase in May. The current federal funds rate is 4.25%-4.50%. It's unclear whether the Fed's interest-rate policy is working to keep inflation under control. However, there are signs that things are moving in the desired direction of the Fed in some areas, but not all.

The rate of inflation has slowed. According to the most recent Consumer Price Index report, the index, which measures price changes across a basket of consumer goods and services, fell 0.1% in December after increasing by the same amount in November. The index is up 6.5% over the last 12 months ending in December, down from 7.1% in November. It demonstrates that the hot inflation that persisted for much of last year is beginning to cool.

Mortgage Interest Rate Weekly Trends 2023

For Tuesday, January 31, 2023, the current average 30-year fixed mortgage rate is 6.44%, falling 3 basis points compared to this time last week. If you're in the market for a mortgage refinance, today's national 30-year fixed refinance rate is 6.47%, decreasing 8 basis points over the last seven days, according to the Bankrate’s national survey of large lenders.

Over the past 52 weeks, the benchmark 30-year fixed-rate mortgage has averaged 5.75 percent. A year ago, the 30-year fixed rate mortgage was 3.71 percent. Four weeks ago, the rate was 6.74 percent. The 30-year fixed-rate average for this week is 2.68 percentage points higher than the 52-week low of 3.76 percent.

Fed's actions don’t directly drive fixed mortgages’ moves, but the Fed does sway 10-year Treasury yields — which are strongly correlated to mortgage rates. Some analysts believe fixed mortgage rates will fall below 6 percent in 2023 as a recession looms.

3-month trend 30-Year Fixed Rates 15-Year Fixed Rates 10-Year Fixed Rates 5/1 ARM Rates
1/27/2023 6.43% 5.65% 5.63% 5.42%
1/20/2023 6.36% 5.63% 5.72% 5.41%
1/13/2023 6.46% 5.85% 6.01% 5.50%
1/6/2023 6.52% 6.06% 6.22% 5.50%
12/30/2022 6.59% 5.95% 5.89% 5.45%
12/23/2022 6.47% 5.83% 5.74% 5.45%
12/16/2022 6.60% 6.00% 6.11% 5.46%
12/9/2022 6.52% 5.91% 5.99% 5.45%
12/2/2022 6.67% 6.04% 6.07% 5.48%
11/25/2022 6.81% 6.16% 6.26% 5.51%
11/18/2022 6.84% 6.22% 6.35% 5.54%
11/11/2022 7.24% 6.46% 6.56% 5.62%
11/4/2022 7.23% 6.45% 6.67% 5.53%
10/28/2022 7.20% 6.43% 6.67% 5.55%
10/21/2022 7.20% 6.43% 6.59% 5.44%
10/14/2022 7.08% 6.28% 6.33% 5.37%
10/7/2022 6.89% 6.07% 6.12% 5.34%
9/30/2022 6.82% 5.97% 6.07% 5.20%
9/23/2022 6.43% 5.66% 5.78% 4.84%
9/16/2022 6.19% 5.51% 5.61% 4.63%
9/9/2022 6.08% 5.33% 5.46% 4.52%
9/2/2022 5.95% 5.18% 5.25% 4.42%

(Source: Bankrate.com)


Sources

  • https://www.mba.org/
  • https://www.bankrate.com/mortgages/rate-trends/
  • https://www.bankrate.com/mortgages/mortgage-rates/
  • https://www.forbes.com/advisor/mortgages/mortgage-interest-rates-forecast/
  • https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional

Filed Under: General Real Estate, Housing Market Tagged With: mortgage interest, Mortgage Interest Rates Forecast, mortgage rates, Mortgage Rates Forecast

How to Apply and Qualify for a Mortgage Loan Modification?

January 28, 2023 by Marco Santarelli

What is Mortgage Loan Modification?

A mortgage loan modification is a change to the terms of an existing mortgage loan made to make the loan more affordable for the borrower. Changes to the interest rate, loan term, or loan amount are examples of this. A loan modification is intended to assist the borrower in avoiding foreclosure by lowering their monthly mortgage payments to a more manageable level.

Loan modifications can be accomplished in a variety of ways, the most common of which is by lowering the interest rate or extending the loan term. This can reduce the borrower's monthly payment, making it more affordable. A loan modification may also include a change to the loan's principal balance, known as a “principal reduction,” which reduces the monthly payment.

When a borrower is experiencing financial hardship, such as a loss of income, an increase in expenses, or an unexpected event that makes it difficult to keep up with mortgage payments, loan modification is usually recommended. It's important to note that loan modification is not a one-time fix; it's a process that can take time to complete and may not work for all borrowers. The lender must approve the modification, and it is critical to communicate with them throughout the process.

How to Apply and Qualify for a Mortgage Loan Modification?

Before you apply for a mortgage loan modification, it's important for you to understand the lender guidelines and whether or not you qualify for one. A mortgage loan modification is an adjustment to your mortgage by your lender with the intention of cooperating with you in situations where you are having financial difficulties. The objective is to make your loan more reasonable, taking into account your present financial condition so that it becomes manageable for you.

Before you make a decision to pursue a mortgage loan modification, you must determine whether you are eligible and fall under the guidelines of a mortgage loan modification. Mortgage loan modification guidelines vary from one lender to another. Some common guidelines required by every lender include information on your gross and net income, whether you have fallen behind on your mortgage payments, how much equity you have in your property, and whether or not your property value is less than what you owe on your mortgage.

To apply and qualify for a mortgage loan modification, you will typically need to follow these steps:

Contact your lender: The first step is to reach out to your lender and let them know that you are having difficulty making your mortgage payments. Your lender will likely have a specific department or process in place to handle loan modification requests.

Gather documentation: You will need to provide documentation to your lender to demonstrate your financial hardship and ability to repay the modified loan. This may include tax returns, pay stubs, bank statements, and other financial documents.

Complete a loan modification application: Your lender will likely provide you with a loan modification application that you will need to complete and return. This will typically include information about your income, expenses, and assets.

Submit the application and documentation: Once you have completed the application and gathered all of the necessary documentation, you will need to submit it to your lender for review.

Wait for a decision: Your lender will review your application and documentation to determine if you qualify for a loan modification. This process can take several weeks or even months.

Complete the modification process: If your lender approves your loan modification, you will need to complete any additional steps, such as signing new loan documents or completing a trial period, before the modification can take effect.

In order to modify your mortgage loan, you will need to furnish the following documents:

  • Hardship letter
  • Borrower and co-borrower information sheet
  • Proof of income (W2's or 1099's)
  • Financial worksheet (also known as an income and expense sheet)

The majority of people stay away from carrying out a mortgage loan modification on their own since they have very little knowledge of the process, who they should communicate with, and what forms are necessary to carry out the modification. Above all, people simply don't understand all the modification guidelines.

Once you're familiar with your lender's guidelines, you can prepare your modification package for submission based on your hardship situation. A majority of lenders would consider the following conditions as a hardship:

  • Job loss or unemployment
  • Hospitalization for illness
  • Death of a family member
  • Divorce
  • Adjustment of a mortgage loan to a higher interest rate
  • Inability to work
  • Entering into a contract with a fraudulent lender

In addition to the hardship letter, your financial worksheet plays an extremely significant role in your mortgage loan modification. Your lender may not approve your particular hardship because of your current income and expenses. For example, you may not qualify if your NEW mortgage payment will exceed 30% of your current monthly income. The lender wants to be sure that you can cover your monthly payment and other expenses. Again, knowing your lender's modification guidelines is very important to a successful outcome.

It's important to note that the process and requirements for loan modifications can vary depending on the lender and the type of loan you have. Additionally, the government has different programs like HAMP (Home Affordable Modification Program) that can help homeowners to qualify for a loan modification. It's always recommended to get in touch with a housing counselor or attorney to understand the process better and to make sure that your paperwork is completed correctly.

Filed Under: Financing, General Real Estate Tagged With: Home Loan Modification, Mortgage Loan, Mortgage Loan Modification

18 Best Real Estate Investing Books For Beginners 2023

January 26, 2023 by Marco Santarelli

Best Real Estate Books on Investment

Best Real Estate Books

Real estate investments can provide excellent returns if the proper steps are taken, but many new investors lack the necessary skills and education. I wanted to discuss the significance of real estate education through books. This article will present the 18 best real estate investing books to get you started in 2023. If you read all of these books, you will gain a lot of knowledge and learn from the case studies of top investors who have had great success in real estate investing.

Are you a real estate investor? Are you planning to invest? Real estate investing is an ever-evolving industry. Real estate is regarded as one of the best investments that a person can make. But why do so many people struggle with it? The first step is to prepare your mind and habits for success. You will also require adequate real estate education to assist you along the way.

Why Should You Read the Best Real Estate Books as a Beginner in Investment?

Well, real estate investors disagree on many topics, but one that nearly all agree on is the necessity of investing in yourself. There are literally thousands of books out there that deal with real estate investing, and I've probably read a lot of them! These are my choices of good books on real estate investing for this year. What about you?

Reading books is one thing, but where do you start? To be successful as a new real estate investor, you need to learn but it can be hard to sift through all the books to choose from. Finding a good real estate book can be difficult, especially if you don't read a lot. So I've created this list and I felt I would give it to you in a way that breaks it down into several categories.

I want it to break it down into the following areas, mindset, finance, and investing real estate investing for beginners, which is really from beginners to intermediate level investors, and then real estate investing books to grow your business. So once you've gotten started just continue to grow and scale books on property management and books on taxes, or more specifically on how to save and minimize your taxes.

So that's essentially six categories. Now, keep in mind, this is not an exhaustive list. There are literally hundreds, if not thousands, but hundreds of books on real estate. In fact, if you don't believe me, just go to amazon.com and type in real estate investing or even just real estate. And you will see there are a lot of books and that's the problem. There are just too many books to choose from, and it's really hard to know which ones are good, great, or bad. And believe me, there are many bad books out there.

The other thing too, to keep in mind is that if you don't like reading, or if you're a slow reader, you can get the audiobook version of most, or probably all of these books that I have on the list today. So whether it's print or audio, there's something for you today. In fact, you could actually have both. You could read when you have the time to read and listen to the audiobook in the car, or when you're doing stuff around the house or going for a walk.

And last but not least, I will edit and continue to edit and add to this list from time to time. So it's a living, breathing dynamic list. It's not static, it's not a one size fits all list, but I wanted to pick what I felt were the best books for this list at this time. So with that, let's start with the first of the six categories and that is the mindset.

So I've tried to keep it to about anywhere from two to four books per category or section, it's probably an average of three books per section. And what I'm going to do is just tell you the book and give you a brief description of that book and what you can expect from it. And then you can just decide on your own, whether it's something you want to listen to or read. So the three books that I picked for mindset start with a classic, a perennial classic, and most people would think I'm going to say, Think and Grow Rich.

That is a great book. And I do recommend reading the classic, the original book, not the revised edition of it. If that's a book that you haven't read or it's been a long time and you probably should go back to reading it because Napoleon Hill's come out with a lot of great books and a lot of great content because he had access to some of the wealthiest people in the country back in the day.

18 Best Real Estate Investing Books For Beginners 2023

Below, you will find 18 of the best real estate investing books for beginners recommended by entrepreneurs and investors. Read these real estate books in 2023 to become successful in this business. These books are vital to get success in real estate. They will form the backbone of your success for years to come. These books are not just real estate specific, they will also help you develop a winning mindset.

1. The Richest Man in Babylon

Best Book To Read On Real Estate Investing

But my first pick is The Richest Man in Babylon. And again, this is the original edition that I'm referring to, not the edited or revised edition for the 21st century. Get the original text. The Richest Man in Babylon is based on Babylonian parables, and it has been hailed as the greatest of all inspirational works on the subject of thrift and financial planning, and personal wealth in simple language, these fascinating and informative stories in the book set you on a sure path to prosperity and it's accompanying joy.

So these are just great stories. It's not really a how-to book. It's more of a storybook than anything else, but it is a celebrated bestseller. And it often offers an understanding and a solution to most people's personal financial problems, whether they know it or not, it identifies what your problems are, but revealed inside of the book are the secrets to acquiring money, keeping the money, and making money, earn more money for you, which really parallels perfectly with what I talk about all the time.

And that is the three categories, buckets, or areas of creating wealth. And that makes money, grows your money and protects your money. So anyway, stick to the original edition. It is the original uncensored version of the book, the language of the content, and the message from the author. George S Clason, I believe that's how you pronounce his last name.

2. The Compound Effect: Jumpstart Your Income, Your Life, Your Success

Best Real Estate Investing Books to Read in 2021

And this book was actually written in 1926. So it's way back there. In fact, it's even before Napoleon Hill's Think and Grow Rich. Now, fast-forward to the recent past as in the 21st century, the next book I'm sure many of you are familiar with, but probably most of you are not a book by Darren Hardy called The Compound Effect: Jumpstart Your Income, Your Life, Your Success.

This book reveals the core principles that drive success and The Compound Effect book contains the essence of what every super achiever needs to know practice and master to obtain those extraordinary results, extraordinary success. So in this book, they talk about things like how to win almost every time, the number one strategy to achieve any goal and triumph over your competition.

It really is a book to help separate and differentiate yourself. It talks about eradicating bad habits and we all have bad habits. And often those derail your progress. It talks about the real lasting keys to motivation, kind of like what Tony Robbins talks about, but more so. And that is how to get yourself to do things you don't feel like doing.

And I know we're all there at various times of the day, the week, the month, how to capture that elusive awesome force of momentum. Because once you get going, you feel like you want to keep going. You don't want to stop because once you get going, it's almost hard to stop, and talks about many other things and something he refers to as the acceleration secrets of super achievers.

So The Compound Effect has a great title because small successes compounding on small successes lead to larger successes, which continue to compound on themselves. And so once you have that momentum, it continues to grow. But if you're serious about living an extraordinary life, then read this book. It will help to create the success that you desire.

3. High Performance Habits

Best Real Estate Investing Books to Read in 2021

My third book pick here is from Brendon Burchard, someone who I had on the show, not too long ago, I think it was about a year, year, and a half ago. Great guy. In fact, our interview went so long. I had to split that episode into two parts. So you could look for that episode. And I believe it was called High-Performance Habits, which happens to be about the book that he wrote.

One of his last books is called High Performance Habits. How extraordinary people become that way. So 20 years ago, or so Brendan became obsessed with answering three questions. He wanted to know why do some individuals and teams succeed quickly more quickly than others, and actually sustain that success over the long term. You wanted to find out of those people who actually pull it off, why are some miserable?

And then the other group are consistently happy on their journey. And thirdly, you wanted to know what motivates people to reach for higher levels of success in the first place. And then what practices help them improve the most. So after doing some extensive, original research that he does in his own company, and after a decade, as the world's leading high performance, coach Brandon found the answers to these three questions.

And it turns out that just six deliberate habits give you that edge. Now he says that anyone can practice these habits. And when they do extraordinary things happen in their lives, in their relationships, in their careers, it really is a good book. It is definitely well worth reading regardless of what you do in terms of your job or career, business, or practice. It really is a book on becoming a high performer. And to become a high performer, you must seek clarity.

Clarity is so critically important. You have to know how to generate energy. You have to know how to raise necessities, increase your productivity, develop influence, and then lastly demonstrate courage. And this is what he talks about in the book. So it's really the art and the science of how to do it all. And that's what you're going to learn by reading this book or listening to the audio.

So those are my three picks and believe me in this category about mindset, literally, there are over a thousand books. I mean, there is so much out there from Brian, Tracy to Tony Robbins and you name it. But these three are, I think very, very fundamental. In fact, I would argue that they are cornerstone books, The Richest Man in Babylon, The Compound Effect, and High-Performance Habits will improve and change your life. Okay. That's the first category.

The second category is finance and investing. And again, this is one of those sections where there are literally hundreds of books. And again, it's hard to narrow it down, but it wasn't too hard for me to pick. What I feel are probably the three cornerstone books, regardless of how experienced you are how much, you know, how seasoned you are, or how wealthy you are.

Because the fundamentals and the principles found in these three next books are great as a refresher. I'm sure you're going to read it. And there are things that you never knew before, and it's just great additional knowledge.

4. Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

Best Real Estate Books 2021

So the first one is probably no surprise to anybody. I'm sure most of you have read this at some point in the last 22 years, it's been that long, but many of you know of it. So it is Rich Dad, Poor Dad, what the rich teach their kids about money that the poor and middle class do not buy. Obviously, Robert Kiyosaki, this book has since become the number one personal finance book of all time.

It's been translated into dozens of languages and it's been sold all around the world. I'm not even sure how many millions of copies this book has sold, but it has become a modern-day classic finance classic. So Rich Dad, Poor Dad is Robert's story of growing up with two dads, his real father and the father of his best friend, his rich dad.

And it talks about how both of these men, his fathers shaped his thoughts about money and investing. So the book explodes the myth that you need to earn a high income, to be rich and explains the difference between working for money and having money work for you. And that's a key distinction.

And a lot of the book builds upon that concept, but the book is great because it challenges the belief that your house is an asset, which most people still believe to this day. It is not, it is a liability. And if you don't know why to read the book, it shows why parents rely on the school system to teach their kids about money and why that's a mistake in that.

Doesn't actually work. It defines once and for all, what an asset and a liability truly are. It makes simple definitions for this stuff. And it teaches you what to teach your kids about money for their future. So if you're a parent listening to this and you want to help your children become financially literate and increase their financial IQ, this is a foundational book. It's one of the starting books if you will.

5. Rich Dad's Cashflow Quadrant: Rich Dad's Guide to Financial Freedom

Real Estate Books

So the second book, no surprise is going to be the second book in what is essentially a three-part series of the Rich Dad series of books. These are the three foundational books, but the second book is Rich Dad's Cashflow Quadrant: Rich Dad's Guide to Financial Freedom. This was the second book. So rich dad's cash flow quadrant is a guide to financial freedom.

It picks up where the last book left off first book, rich dad, poor dad. So as the second book in the rich dad series, reveals how some people work less, earn more, pay less in taxes, and learn to become financially free. So cash flow quadrant was written for those people who are ready to move beyond what they feel is job security.

And I say that in air quotes and enter the world of financial freedom. It's for those people who want to make significant changes in their lives and take control of their financial future because this is more of the how-to Rich Dad, Poor Dad was more of the foundational book, kind of laid out the principles and the concepts and some of the definitions that you need to know such as a profit and loss statement, a balance sheet, how money flows and all that, this builds on top of that.

Robert believes that the reason most people struggle financially is that they've spent years in school, but we're never taught about money. And Robert's rich. Dad taught him that this lack of financial education is why so many people work so hard. All their lives it's to work for money, instead of learning how to make money work for them, they basically just work for money.

So this book will change the way you think about your job, your career, owning your own business. And hopefully, it will inspire you to learn these rules of money that the rich use all the time to build and grow their wealth.

6. Rich Dad's Guide to Investing: What the Rich Invest in, That the Poor and the Middle-Class Do Not

Best Real Estate Books

The third book again, no surprises. It's not going to be a shocker. It's really the third book in that rich dad series. And these books work well together. They're built to be stacked on top of each other. So the third book is Rich Dad's Guide to Investing: What the Rich Invest in, That the Poor and the Middle-Class Do Not. So investing obviously means some different things to different people.

And there is a huge between passive investing and becoming an actively engaged investor. And one is not better than the other. There's no right or wrong. We're both at different times in our lives. And it also depends on what we're actually doing. We're always going to be active or passive investors.

Usually, we're both, but you just need to understand the distinction there, becoming an active investor means you're an engaged investor. And so there's a lot of power in that. So rich dad's guide to investing is one of the three core titles in this series. And it covers the basic rules of investing, how to reduce your risk in investing, how to convert that earned income you get from your active job or career, and turn that into passive income.

And he talks about something he refers to as rich dad's 10 investor controls. And this is where he gets into the weeds gets deep into the concepts of investing. So the rich dad philosophy makes a key distinction between managing your money and growing it and understanding the key principles of investing is the first step towards creating and growing wealth.

So this book delivers guidance. You need to help begin that process of becoming an investor and stay on that road till you get to that point of financial freedom. It's really more of a guide. In fact, the title says it is all rich dad's guide to investing. All right, well, those are the three books in the finance and investing category, and it's really the trio, the three rich dad series books, the initial or the original books.

7. The Ultimate Guide to Passive Real Estate Investing

Best Book on Passive Real Estate Investing

Now let's talk about real estate investing for beginners. So this was a little bit challenging for me. In this category, I ultimately decided on four bucks instead of three for this now keep in mind, even though I'm calling it real estate investing for beginners, these books apply to almost everybody. Even if you are a seasoned or an experienced investor, there's a lot of stuff you can learn from these books.

If not every chapter, certainly some of the chapters in these books and the first one is really not a book at all. In fact, it is my ebook that has been a free download on our websites for the last probably 10 years, which has been downloaded literally tens of thousands of times. And I wrote this 40, 42-page ebook as a primer for people to understand the key concepts and key components of investing in real estate, leaning towards passive investing, meaning buy and hold, not flipping real estate, or to actively involved.

It's really about building a portfolio, creating wealth, creating passive income, and learning the fundamental key pieces. So it is really a great primer. So you read it, it's a great starting point, but then you build on top of it with these other books. So The Ultimate Guide to Passive Real Estate Investing the free download on our website is really about the most powerful way to accumulate wealth.

This guide that I wrote has been written to help educate all real estate investors, regardless of their experience level. And again, it's a primer. It talks about the advantages of income-generating real estate, how to analyze properties, key metrics, cash flow returns, what to look for in the quick test to see if a deal is worth even pursuing.

So it's kind of like the smell test, if you will, how to choose some of the best markets and neighborhoods. I try to pack it all in there. There's no fluff. It's just crammed with good information. So if you haven't downloaded a copy or read it, go ahead and do so. I'm going to be updating that soon to kind of a version 2.0, so I'll expand on it a little bit. And I'll just tighten up a few things in there based on today's economy and environment, but not much has changed because principles don't change. All right.

8. How to Invest in Real Estate: The Ultimate Beginner's Guide to Getting Started

Best Real Estate Investing Book

The second book in the real estate investing for beginners series here is How to Invest in Real Estate: The Ultimate Beginner's Guide to Getting Started. This book was written by Brandon Turner. He's got several books. I've picked a couple of his and this book is great if you're starting and good if you're a moderate level investor.

So everyone knows that real estate investing can be a powerful way to build wealth and achieve true financial freedom. But because each person's journey is going to be a little different knowing the first steps to take is challenging for some people. So what this book does, it becomes a manual of sorts on getting started in real estate investing.

It gives you essentially an insider's look at the many different niches and strategies that exist. So it's not all about passive real estate investing. It's got a little bit of everything and it just kind of help to paint pictures. In other words, it shows you the landscape and then you can choose your path.

So what you can do is find which strategy and path work best for you, and then help you build the resources and the goals around that. Unlike most real estate books, this one won't tell you that there's any one secret path, okay. It is considered by many one of the best books on real estate investing.

9. The ABCs of Real Estate Investing: The Secrets of Finding Hidden Profits, Most Investors Miss

Best Real Estate Books

There's more than one path to success in real estate, but it has more than 40 real-life stories in the book from other investors on how they achieve success in real estate investing. And I'm sure you're going to be able to relate to many of those stories. There are a lot of similarities, but there are differences between every person and every story.

All right, the next book, the third book, if you will, is The ABCs of Real Estate Investing: The Secrets of Finding Hidden Profits, Most Investors Miss. And this is by one of the rich dad advisors, Ken McElroy. He is a sharp guy. You know, I've talked to him in the past. I've had him on the show at one point and you know, I like his content. Now he's really a big real estate guy.

He's focused primarily on big multi-family apartment complexes, but he did start with, you know, small real estate, single-family homes. And that doesn't mean that there's a migration path here. Some people will start with, you know, multi-units and apartments and work their way down to single families, duplexes, and fourplexes, and other people do the other way around.

And while other people just stick with one and stay with it. So you can create wealth and passive income with every size and type of real estate. But with his book on the ABCs of real estate investing, he kind of geared it more towards the people who are just getting started in the beginners and just real estate investing.

Think of it like real estate investing one Oh one, but he talks about things on achieving wealth and cash flow using real estate. You know, what a property is potential is how to unlock the myths that float around real estate for people who are seasoned, how to negotiate deals, evaluate properties and the purchase price, how to increase the income on a property, and ways to properly manage a property.

10. Long-Distance Real Estate Investing

Real Estate Investing Books

Now he doesn't get into property management in any depth in this book, it just touches upon it. He actually has another book on that topic, which I'll talk about here in a minute. And then the fourth, if you will, fourth and last book in this category is Long-Distance Real Estate Investing. Now I love that title. He doesn't get too deep into it, but it is a good book. It's by David Green.

It's one of the bigger pockets series books. But you know, what he talks about is living in a hot market or a market that's not suited for buying hold investing because it's just unaffordable too expensive. The numbers don't work, whatever the case is, but he poses the question. Well, how do I take advantage of building wealth in real estate? When I live in a market that I can't invest in, it's impossible, or how do I avoid, you know, market fluctuations or the next market crash.

So we know real estate investing is one of the greatest vehicles for creating wealth, but you need to understand how to choose markets and be able to be nimble and agnostic. And this is stuff I talk about on the podcast all the time, and this is what he talks about in the book. I just wish he would get more deep into the concept of done for you and rent, ready properties, and turnkey properties.

He touches upon it. But to be completely honest with you guys, I have always found since the beginning of bigger pockets in 2007, they've always had a bias towards turnkey, real estate investing, and passive real estate investing in general. They are certainly of the active, real estate investing flavor. They certainly believe in buying, fixing, and creating value on properties.

It seems that to me, that most, if not all of their content, either excludes conversations about turnkey investing, buying properties that are essentially rent-ready. So you don't have to do any fix-up or renovation work. They're all about putting in sweat equity to create value. That's fine, but that's not for everybody. And we all know that a lot of us are busy. We don't want to go down that road.

We just want to invest in real estate and build a portfolio and let it grow over time. So I'm not knocking the book. The book is good. I just wish he had more on the topic of passive real estate, investing, turnkey, real estate, investing, and done for you models instead of hiring a team outside of your local market to essentially do all the grunt work, swinging the hammers, and everything else, that's fine.

But I think he glosses over a little too much. In fact, all the “Bigger Pockets” books gloss over the turnkey space. So in this book, real estate investor and police officer David Green, shows you how he's built a multi-million dollar portfolio through buying, managing, and flipping out of state properties. So keep that in mind when you read it, but he does share tips, tricks, and systems that he's put in place over the years of his real estate investing experience and journey and what he's done to essentially succeed and avoid making mistakes along the way, but just realize that's the perspective.

Anyway, the bottom line with this book, and what I like to talk about all the time is to don't let your location dictate your financial freedom, learn how to succeed regardless of where you live and where you invest, choose the right markets, the right neighborhoods, the right properties, and have the right team around you. And that will be a secret if you will, or a formula to your success.

11. The Millionaire Real Estate Investor

Best Books For Real Estate Investors

All right, the next category is real estate investing to grow. So this is kind of the next level up. One of my favorite books that I read in real estate investing is The Millionaire Real Estate Investor by Gary Keller, Gary Keller well-known author. He is obviously the founder of Keller Williams, the real estate brokerage nationwide real estate brokerage. So he is a real estate investor and a very good one.

Anyone who seeks financial wealth first needs to learn the fundamental truths and models that drive it. And this is what he talks about in the book. So the millionaire real estate investor represents the collected wisdom and experience of over a hundred millionaire investors from all walks of life who have pursued financial wealth and achieved it through real estate.

And so what he did is he basically created this book in a straightforward, no-nonsense way that reveals the strategies that these hundred millionaire investors have used to create financial freedom, independence, and a lifestyle that works for them. So this book essentially is a handbook that has tried and true financial wealth-building principles and models built around real estate that reward your patience and perseverance, and he lays it out.

So some of the things he talks about are the myths about money and investing and especially the ones that hold people back and really how to develop a mindset of a millionaire investor, which goes back full circle to where we began about mindset. You know, even when he talks about this in the beginning part of the book, he talks about how to develop sound criteria for identifying great real estate investment opportunities, how to zero in on key terms and parts of transactions and achieve the best possible deals when you're putting a deal together or looking for a deal.

He also talks about how to develop your dream team, which is something I talk about often proven models and strategies that millionaire investors use to track their net worth understand finances. It's not a very complex or complicated book. It's not going to put you to sleep or cause your eyes to glaze over.

12. The Book on Rental Property Investing

Best Book on Rental Property Investing

I think it's extremely well-written. So again, it's one of my favorite books. It's a blue and white book. The next book in this category on real estate investing to grow is The Book on Rental Property Investing. Again, this one is the second one by Brandon Turner. So in this book, he discusses practical strategies that investors around the world use to build significant cash flow with their rental properties. So this is getting a little bit more into the weeds, a little bit more tactical if you will.

So in this book, you'll learn how to build an achievable plan, how to find good deals, how to analyze those properties and those deals build your team, finance, the rentals, and a whole bunch more, and basically everything you need to become successful at rental property investing. Again, it's a book there's only so much you can put in the book, but it does a good job of laying it out. This is one of the best books on real estate investing. This book will feed what you need to succeed in rental property investing.

13. Advanced Guide to Real Estate Investing: How to Identify the Hottest Markets and Secure the Best Deals 

Best Guide on Real Estate Investing 2021

Okay. So again, think of it like a, a, a practical guide. So there's a lot that he covers in this book, but you know, he starts with why real estate investors fail and how you ensure that you don't. And he talks about four easy-to-follow strategies that you can build your real estate portfolio on creative tips to find those deals, how to achieve success by avoiding property management, which, you know, we all love actionable ideas on financing.

Those rentals. Now, obviously, there are limitations there, but for the most part, it's going to be cheap financings like conventional loans and a little bit of advice on keeping your wealth by deferring and eliminating your taxes, which you know, is really not an extensive part of the book, but essentially something we'll talk about here in a minute last but not least. I included another book by Ken McElroy, and this is the Advanced Guide to Real Estate Investing: How to Identify the Hottest Markets and Secure the Best Deals.

So if you're interested in the real estate investing space, you may have noticed that this part of real estate doesn't get covered much. And when it does the mainstream media focuses mostly on, you know, stocks, bonds, mutual funds, and that kind of stuff. And they don't really talk about real estate as an investment, all that much. It's really about homeownership.

And even when they do talk about it, it's like, Oh, it's like this one, nebulous bob, they refer to as the housing market, but they don't really talk about specific markets unless you're listening to your local news channel, but that's because financial publications, TV, radio, um, they make the bulk of their money from advertising paid by the very companies who provide the mainstream media and those channels with financial services, the advertising, the marketing, all that stuff.

But real estate investment is something that you can do on your own without a large amount of money upfront, as we all know if you just learn how to do it and pick the right markets to do that. So what Ken did with this book is he picked up where he left off in the first book, the best-selling book, ABCs of real estate investing.  And he reveals the next essential lessons and the information that you need as an investor to succeed and continue to scale and grow your business.

So he built on the foundation of the first book, which is kind of like real estate investing one-on-one and he talks more about how to think and operate like a real estate mogul. How do identify and close expert deals, you know, differences between single multi-family property surrounding yourself with the right team to maximize your money, avoid paying thousands in taxes, by structuring property sales wisely? This is a kind of asset protection and tax strategy combined, and last but not least important projections about the future of real estate investing. Now, this book is a few years old, so, you know, I'm sure some things have changed.

14. TheABCs of Property Management: What You Need to Know to Maximize Your Money Now

Best Real Estate Book on Property Management

I don't think Ken was expecting the amount of appreciation that we would have seen over the last two, three years and the lack of inventory. So it kind of compounds what he talks about. The next section is about property management. And so again, Ken wrote a third book on this subject because this is where he actually started his real estate career as a property manager.

And so his book is The ABCs of Property Management: What You Need to Know to Maximize Your Money Now. So as you start to invest and you build your portfolio, the question comes up, you know, how are you going to make it as profitable as possible? And how will you maximize its potential and make it grow in value? And the one word he has for this is management.

Now that doesn't mean you managing the property, although you could, if you want it to, there's nothing wrong with that. And it's probably good to understand how to manage your property, but if you're managing your managers, this is good information. So this book can reveal the key to his success, and that is exceptional property management.

So he teaches you the most important principles and the keys to achieving success, where other people fail, which is often in the management of their properties. So he talks about things like how to decide, you know when to manage your property and went to hire someone, to do it, how to implement the right systems.

If you're doing it yourself structures for your investment, how to manage and maximize cash flow, you know what to expect, essentially it's the life of an owner-manager and how to find the right property manager and avoid the wrong ones. So I think this is a good book as a frame of reference, whether you manage or you don't.

15. The Book on Managing Rental Properties

Best Real Estate Book on Managing Rental Properties in 2021

The second book is if you choose to manage your own properties, it's another book by Brandon Turner called The Book on Managing Rental Properties,  a proven system for finding, screening, and managing tenants with fewer headaches and maximum profits. This is definitely a book for a do-it-yourself. So if you want to manage your own properties, even if it's just one or you already manage your properties, this might be a good supplement to that.

So no matter how great, you know, you are at finding real estate deals, if you, I don't want to manage your properties well or correctly, you're obviously leaving money on the table, or you're not maximizing your returns. Brandon likes to say that being a landlord can be fun, but only if you do it right. So learning to effectively manage your tenants means that you end up with more freedom, less drama, higher profits from your real estate business.

And it just ends up looking good, feeling good. So Brandon's a, you know, an experienced property manager, he's been managing his own properties for a long time. And what he does in this book is essential takes you on an insightful tour of their management business there as in, you know, him and his wife. So you can learn how they've been able to maximize profit, minimize their stress.

He says that he has a blast doing it. So I guess you can learn how to do that too. But he talks a lot about his personal stories of the mistakes that they've had, and that you can learn from. And he talks about the different tools and tricks and systems that they've put in place over the years. And the book probably will change the way you think about property management altogether.

So there's a lot of stuff he covers in the book. I think it's more than a beginner's book. It's certainly a primer, but it has some advanced content. So overall I think it's great. And last but not least taxes, you know, the thing we want to defer or eliminate as much as possible. So I have three book picks here. There are many books out there on taxes, but I think these are great fundamental books.

And really what I've tried to do again, is boil it down to the best two, three, or four books in each section that will give you everything. You need, the nuts bolts strategies, tactical plans, and not leave you hanging. So the three books I chose for the area of taxes is first and foremost, the book by Tom Wheelwright, another one of Robert Kiyosaki's rich dad advisors, great guy, super smart. I've had him on the show several times. Always have great episodes talking to Tom, but his book, which he just revised recently.

16. Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes

Best Real Estate Books on Taxes

So it's the newly revised version, but it's called Tax-Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes, what a great title. So I will say that this book is slanted a little bit more toward business owners and entrepreneurs, but it applies to anybody and everybody because if you pay taxes in any way, shape, or form, you're going to learn something or you can learn something from this book.

So tax-free wealth is about tax planning, concepts, and how to use the tax laws to your benefit. So Tom explains how the tax laws work and how they are designed to actually reduce your taxes, not increase them. The key here is to understand how taxes and tax law works. So the book explains how to use the tax laws to your advantage, and in ways that will support your vision and growth plans, not only for your company or your business, but you know, for your investing empire as well, however, that is structured and you know, more specifically real estate.

17. The Book on Tax Strategies for the Savvy Real Estate Investor

Best Real Estate Book on Tax Strategies for the Savvy Real Estate Investor

So once you understand the basic principles of tax reduction, then you can immediately reduce your taxes to the point where eventually you may be able to legally eliminate and contactless and drastically reduce your taxes overall. And he talks about this in the book. So it's about minimizing, eliminating, and deferring your taxes.

Those are the three things he talks about in the book. Now, once you get through that, there are two books specifically on real estate investing, as it relates to taxes. And the first one is The Book on Tax Strategies for the Savvy Real Estate Investor. The subtitle to this book is powerful techniques.

Anyone can use it to deduct more, invest martyrs, and pay far less to the IRS. The book was written by Amanda Hahn. She actually lives in Orange County here, not too far from Ireland. And what she talks about is ways to maximize your deductions for your real estate business.

18. The Book on Advanced Tax Strategies: Cracking the Code for Savvy Real Estate Investors

Best Real Estate Book on Cracking the Code for Savvy Real Estate Investors

And they also talk about practicals on how to minimize your taxes, not only for this year but in future years, as well as ongoing strategies that will make your next tax season that much easier. So what they want to do is basically help you save thousands of dollars by having great tax strategies in place.

So they talk about creative methods to maximize your deductions, clever ways to write off your kids' strategies, to write off every penny on your travel tips and tricks to cut down on bookkeeping time, and simple procedures that will protect you from IRS audits. So that's their first book, the foundational book, there's a lot in that book, but then they wrote a sequel to it, which is my third book in this category of taxes again by Amanda Hahn.

And this is The Book on Advanced Tax Strategies: Cracking the Code for Savvy Real Estate Investors. And you know, what they say is that when it comes to taxes, it's not about how much money you make, but how much money you actually keep. So if you're tired of working hard all year, just to lose, you know, the largest chunk of that money that you earned to the IRS, then, you know, obviously you want to learn as much as you can about taxes, you know, believe it or not.

The US tax system is filled with loopholes designed specifically to benefit real estate investors. And this actually got better in 2017 with the new tax act that was put into play under the Trump administration. So what was great as far as tax benefits for investors and real estate investors actually got even better with that tax act. So this book is a comprehensive follow-up to the book on tax strategies, which was a best-selling book by Han and Matthew McFarland.

And this just brings you more strategies to slash your taxes and turn your real estate investments into a tax-saving machine. And, you know, again, this book just goes deeper into a lot of the stuff from 10 31 exchanges to taking advantage of opportunity zone, tax benefits, how to supercharge your nest egg with self-directed investment strategies, steps to use your rental properties to legally wipe out your taxable income.

What else did they talk about in their ways to take advantage of the tax reform benefits that came about with all your real estate deals, accelerating your depreciation, and even common retirement and investment tax traps, and really how to avoid those? So, you know, people sometimes make the mistake of investing in their retirement account and then only find out that, you know, they've made a mistake. They don't have any tax benefits or maybe are not liable for tax penalties because they did it wrong.

Here's another blog that you can read – 12 Books to Read if You Want to Get Rich.

Filed Under: General Real Estate, Getting Started, Real Estate Investing, Selling Real Estate Tagged With: Best Real Estate Books, Best Real Estate Investing Books, Real Estate Books, Real Estate Investing Books For Beginners

How To Invest in Real Estate During a Recession?

January 25, 2023 by Marco Santarelli

What is a Recession in Real Estate?

It can be scary to invest in anything during a recession. We all carry visions of the great depression and bread lines and people selling apples. The idea of putting your money into anything other than your mattress can be frightening for some. However, real estate should never be looked upon as an ordinary investment. Real estate is one of the few investments that we actually use and need. Everyone needs a place to live and call home. And real estate has systematically and quantifiably proven to have risen in value over the decades.

During an economic downturn, real estate markets typically see a slump in both value and volume of transactions, which is known as a recession. This may arise because of a general economic downturn or because of particular circumstances like an excess of available housing units, a shift in interest rate expectations, or a decrease in demand for real estate.

Many people may find it difficult to make their mortgage payments during a recession, which can result in an increase in foreclosures and a decrease in property prices. A decrease in construction activity and the associated loss of construction and real estate industry jobs may result from this. Recessions in the real estate market can also cause a decline in the value of commercial buildings because tenants may find it difficult to keep paying the rent.

Property values may plummet and commercial real estate may become less in demand as a result. It's also worth noting that a recession in the real estate market can be caused by a variety of factors such as an oversupply of housing, changes in interest rates, or a fall in demand for property. Because there are so many more properties on the market than there are buyers, in other words, supply outstrips demand, the price for property in most areas can fall considerably during a recession.

Do This When Investing in Real Estate During a Recession

Investing in real estate during a recession can be challenging, but there are also opportunities to be found. Here are some strategies for investing in real estate during a recession. Look for distressed properties to buy cheap. Foreclosures, short sales, and other distressed properties can be found at a significant discount during a recession. Look for these properties and consider renovating and reselling them or renting them out.

Do not feel intimidated by a real estate agent who tells you that you are going to “insult” someone if you offer a low price for their property. The real estate agent wants you to spend as much as possible because their fiduciary responsibility is with the seller, and they get a commission based on the sales price. Use your head and take a look at the market.

When you invest in real estate during a recession, consider the following:

Why Are They Selling?

If you're purchasing from a builder/developer then why they are selling becomes less important. But if purchasing directly from the owner in a private sale, you can find out by simply asking the seller or your agent. If the property is in a state of disrepair, chances are that there are financial problems. Don't be afraid to offer a significant amount less. If the owner is buying another home and needs to close on the first one soon, again don't be afraid to offer less than their asking price.

How Long Has The Property Been On The Market?

A few years ago, a home that was on the market for several months was either priced too high or there was something significantly wrong with the property. Today, properties stay on the market for 90 days or more in many parts of the country due to the prevailing market conditions. Avoid making a lowball offer on a property that is fresh on the market unless you know it is going into foreclosure or just about to become foreclosed upon. However, feel free to make low offers on properties that have been on the market for a month or more. Those that have been on the market for over a year are owned by people who are willing to ride out the storm and will most likely not be sold for a low price.

Is The Property In Foreclosure?

If the property is bank owned, you should be prepared to offer a lot less than the asking price. Don't allow a real estate agent to sway you when it comes to making an offer. If they say, “I do not want to present such a low offer,” tell them that you are prepared to find someone else who will. There are many real estate agents looking for a sale, especially in today's market. If the property is in foreclosure, offer at least 20 percent below the lender's asking price.

Invest in Multi-Family & Commercial Properties

Multi-family properties, such as apartment buildings, can be a good investment during a recession. They can provide a steady stream of rental income and are often more stable than single-family homes. Commercial properties, such as office buildings and retail spaces, may also be a good investment during a recession. These properties can provide a steady stream of rental income, and as businesses may struggle, it can also lead to lower rental rates and better negotiation terms.

Look for Undervalued Markets

Some markets may be more affected by a recession than others. Look for markets that have been hit hard by the recession and may be undervalued as a result. Real estate markets can take time to recover from a recession. Be patient and don't be discouraged if you don't see immediate returns on your investment. Consult with a real estate professional or a financial advisor before making any investment decisions. They can help you evaluate the risks and potential returns of different real estate investments.

Contrary to what you may have heard, the recession is the best time to buy a property. Always do your homework and don't be afraid to invest in real estate during a recession. It's important to remember that investing in real estate during a recession is not without its risks. It is important to do your research and understand the market you are investing in and have a long-term perspective. It's also important to have a good financial plan and a diversified portfolio.

Filed Under: Economy, Foreclosures, General Real Estate, Housing Market, Real Estate Investing Tagged With: Investing in Real Estate During a Recession, Investment Properties, Investment Property, Real Estate Investing, Real Estate Investment, Recession in Real Estate

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