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Investing in Real Estate with Clayton Morris | Investing for Beginners

1060: Do Interest Rates Matter for Real Estate Investing? - Episode 1060

Investing in Real Estate with Clayton Morris | Investing for Beginners

Clayton Morris

How To, News, Education, Business News, Business, Investing

4.41.1K Ratings

🗓️ 13 June 2024

⏱️ 5 minutes

🧾️ Download transcript

Summary

We’ve seen mortgage interest rates all across the board over the past few years. From a historical low in early 2021 to a recent peak at 8%, there’s been a lot of fluctuation in the market. And of course, this impacts the housing market in a number of ways.

But, do interest rates matter for real estate investing? On today's show, we're going to unpack this question and go into some of the nuances. If you're wondering if you should invest in this current market, click play!

Transcript

Click on a timestamp to play from that location

0:00.0

So do interest rates even really matter for real estate investing?

0:09.5

You know, we've seen mortgage interest rates all over the board over the past few years from historical

0:13.6

lows in early 2021 to a recent peak at 8% but a lot of fluctuation in the market.

0:20.0

Holy smokes and of course this impacts the housing market in a number of ways.

0:24.0

So do interest rates really matter for real estate investing,

0:28.0

not just buying a home to live in like a primary loan,

0:31.0

but I'm talking real estate investing. So of course the interest rates matter.

0:34.8

They're an important consideration that you should factor into your ROI, your

0:38.8

return on investment. But should a higher interest rate alone discourage you from reaching your goals?

0:44.1

I say no freaking way. In this video I'm going to share a few things that you should consider before you let rates

0:49.6

dissuade you from investing in real estate. So let's get into it. The interest rate is only one

0:55.2

factor in deciding if a deal makes sense or not. Now if you could find a great property for the

0:59.7

right price, you have enough money for a down payment and the returns are good, then why would you let one number discourage you?

1:05.3

You know, why would you let an interest rate discourage you? Consider how those other numbers, like the price, the returns,

1:11.5

the impact, how it all impacts the deal as a whole.

1:14.7

Having a slightly higher than desired interest rate shouldn't impact the overall merit of

1:19.4

the deal. In fact, the interest rate is far less important than other factors like returns.

1:25.1

I've seen people who weren't even, you know, they had a great interest rate, but they didn't do their

1:29.2

math, they didn't do their return on investment numbers up front, and guess what? Their taxes were higher than they anticipated,

1:35.8

the cash flow was lower than they anticipated, their repairs were higher than they anticipated,

1:41.1

and their returns were garbage as a result.

1:44.3

So the interest rate is really low on the list.

...

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