Ever since mortgage interest rates jumped in 2022, some Californians have had a strategy: Buy now and, once rates drop, refinance to save hundreds of dollars each month.
The idea — pushed by some real estate agents — was supposed to be a trade-off. The buyer could pick up a home in a slower market, and though interest costs would be high, they wouldn’t stay that way.
The strategy may still work, but so far, high borrowing costs are here to stay. In recent weeks, rates have climbed higher, surpassing 7% for the first time since last year.
If you bought a home with this strategy, The Times would like to speak with you about how it has worked out.
CHICAGO – NOVEMBER 05: Partial view of the Chicago skyline, photographed from outside the Adler … [+] Planetarium in Chicago, Illinois. (Photo By Raymond Boyd/Getty Images)
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When it comes to real estate investing, taking a long-term approach has key benefits. The most successful investors I’ve dealt with in my career have built their portfolios over time. While there could be challenges to acquiring and refinancing assets in today’s market, there are still opportunities to be had. If you’re an investor who has already closed on transactions, you could leverage your existing portfolio. If you’re new to the game, you might opt to focus on the first deal, after which you’ll gain some credibility and can begin to build your track record.
Once you’ve held a piece of property for some time, there could be several options to pursue, depending on your business model and pool of investors. You might decide to hold the place, refinance it, or sell. As you make transactions, you’ll want to let others know. Spreading the word about your real estate investment activity can lead to more connections.
Building a Portfolio
Most likely when you acquire a property, you’ll have a plan in place which will dictate the long-term objectives. Your partner and other investors may be interested in holding the property, or they might be looking to move on after several years. If others take their return and shift funds elsewhere, you’ll have to decide whether you can maintain the place on your own and still get the return you want.
Refinancing could be brought into the discussion, although in today’s market, this step may not enable investors to get the same return on equity that they could take out in the past. In the past, refinancing could have brought a lower interest rate and enabled investors to take cash out from the equity. However, as debt service coverage ratios have become more conservative, along with the proceeds, in some cases a refinance to take out cash may not be possible. It could be a time to think about selling to get a return on equity.
If holding the property or refinancing won’t provide your desired return, you might consider selling the place. If you do, you’ll want to work with a knowledgeable investment sales broker. Look for someone with a laid-out marketing strategy who will share your opportunity with a broad audience. Check that the broker has a strong track record and a reasonable timeline in place based on the market conditions.
As you think about selling, you’ll want to talk to your accountant about the tax implications. They can help you understand what your potential capital gains could be. They’ll also look at taxes from a federal and local level. Knowing what your after-tax scenario will be may make it easier to determine what you want to do with the asset.
Section 1031 of the IRS tax code allows you to exchange one property for another of like-kind without having to pay capital gains tax. Often called a 1031 exchange, there are rules you’ll have to follow for this process, including acquiring another property (or properties) as an investment and using a qualified intermediary to hold your funds in escrow. You’ll typically have 45 days after closing on the first property to identify the next acquisition (or acquisitions), and you’ll need to close on them within 180 days of closing on the first place.
Spread the Word
As you acquire real estate assets, you’ll want to let others know of your activity. Some real estate professionals who have been guests on my podcast “The Insider’s Edge to Real Estate Investing” do an incredible job of promoting the properties they are closing. These include Steve Kachanian from Klosed, and Jeffrey Znaty and George Giannopoulos from Kings Capital.
Spreading the word about your track record brings several benefits. Primarily, this strategy can help you stay top of mind for investment sales brokers. These professionals are often very busy with listings that they’re trying to sell. If you’re demonstrating that you’re active, brokers will be more in tune with what type of asset you’re interested in. The adage that “deals lead to more deals” is certainly true.
Certainly, acquiring an initial property takes time and effort. After crossing that hurdle, you can think about building your real estate portfolio. As you move forward, you’ll want to develop a strategy around cultivating your brand and reaching your target audience. Let others know what you’re doing and what you’re interested in, and you’ll likely find an increasing number of opportunities for your next investments.
Bishop Hezekiah Walker, signs on as the Brand Ambassador for LOANS FROM LISA, and invites communities to attend the very first ever, free nationwide “Homeowner Seminar Church Tour”.
Press Release –
updated: Nov 13, 2017
PHILADELPHIA, November 13, 2017 (Newswire.com)
– Bishop Hezekiah Walker and LOANS FROM LISA take the mortgage industry by storm with the very first ever nationwide “Homeowner Seminar Church Tour”. The founder and senior pastor of the Love Fellowship Tabernacle Churches, Bishop Hezekiah Walker, is now the Brand Ambassador for LOANS FROM LISA. This is the very first time that a free nationwide “Homeowner Seminar Church Tour”, spanning over 42 locations across the country, has been done for church communities, featuring a two-time Grammy Award-Winning Gospel Artist as the Brand Ambassador in partnership with a direct Mortgage Banker.
LOANS FROM LISA will also feature Bishop Hezekiah Walker in a nationwide advertising campaign. View one of the commercials here: https://www.youtube.com/watch?v=8X9qpyKbSTU. The tour will run from January to June 2018, and include stops in several major cities, including: Brooklyn, St. Louis, Baltimore, Charlotte, Jacksonville, Miami and Philadelphia.
I’m excited to be the Brand Ambassador for LOANS FROM LISA and bring this information to communities across the country. It’s exciting that so many who have always dreamed of homeownership and need refinancing options will have access to this information.
Bishop Hezekiah Walker, Brand Ambassador
Through the upcoming free “Homeowner Seminar Church Tour”, prospective and current homeowners will gain a better understanding of the mortgage process, find out the three letters they need to know to qualify for a mortgage and learn tips to improve their credit. First-time home buyers will learn information for down payment programs and closing cost assistance. Current homeowners will learn life-changing refinancing options, addressing the varied needs of different demographics, from millennials to seniors.
“I’m excited to be the Brand Ambassador for LOANS FROM LISA and bring this information to communities across the country,” says Bishop Hezekiah Walker. “It’s exciting that so many who have always dreamed of homeownership and need refinancing options will have access to this information.”
About LOANS FROM LISA:
LOANS FROM LISA, a branch of Family First Funding, offers high-quality mortgage banking services to residential and business customers, and is a direct lender that has the ability to underwrite loans within their corporate office in Toms River, New Jersey. They also have over 15 relationships with FHA and special niche investors that allows them to provide financing for borrowers with less than perfect credit, no ability to document income for commercial loans, unique properties and “back-against-the-wall” deadlines.
“We are really excited that we are working with LOANS FROM LISA … it’s going to be an amazing journey,” says Bishop Hezekiah Walker. “We want everybody to get excited … because you’re closer to getting into your home than you think.”
LOANS FROM LISA aims to provide clients with competitive rates and reasonable fees while keeping clients informed and educated throughout the process, embodying their motto, “Homeownership is closer than you think!”
This free “Homeowner Seminar Church Tour” was developed out of a partnership between LOANS FROM LISA and their new brand ambassador Bishop Hezekiah Walker. View the commercial with Bishop Walker endorsing the Church Tour at https://vimeo.com/241008703.
To schedule an interview with Lisa Farrell, Branch Manager of LOANS FROM LISA, or for press inquiries, please contact:
