Real Estate – today we’re tackling the conundrum: Should I Stay or Should I Go? To say the last couple of years have been insane in real estate, is an understatement for sure. We’ve seen some crazy-low interest rates transform into some crazy-insane fears in the market.
Buyers and sellers haven’t known what to make of the market {thanks news outlets, for your scare tactics}. But what do we make of the market now? We’re trying to answer that in bits and pieces here as part of what we do in providing information to you. And today, if you locked in that incredibly low rate and feel a little stuck, we want to tackle the issue of what to do with it, and your desire for something new.
As I mentioned, 2021 and 2022 brought some insane interest rates. They were the kind we’d never seen before and likely will never happen again in our lifetime. It also has created a real problem for a lot of people and it goes something like this, “I have a 2.75% {or fill-in-the-blank} interest rate I could never imagine selling this house because I’m not letting go of that rate. I’d be crazy to”.
Or would you? It’s worth thinking about.
If you listen to the pundits, then it is all doom and gloom and you better count your lucky stars because we’re at or near a 7% rate and you’d be a fool to move, {blah, blah, blah}. If you haven’t read it yet, check out where we talk about a 7% interest rate being historically normal. So do yourself a favor and turn off Fox, CNN, {or whatever clickbait} and enjoy life a little.
There are two obvious options for your home and 1 that most people don’t consider. The answers are:
1. Renovate it: You know we love this answer. It’s what our company was built upon. We love taking spaces and creating homes that people love, to reflect their family. Whether locally or through our e-design service, we adore our clients and walking with them through the process of transformation.
Renovating might be the best option for you for a number of reasons:
a. You absolutely love the location.
b. You vowed you’d never move again.
c. You believe your home has the potential, but you just don’t know how to realize it. Or a host of other valid and valuable reasons. {We get it and we can help, too!}
2. It’s not your forever home: The second obvious option is, that you’re not in love with the location or you don’t see it as your forever home, so why not move? Maybe you didn’t lock in that 2.5% rate, or you’re betting rates come back down, and you don’t mind refinancing later. Perhaps you’re a cash buyer so rates don’t matter. There can be a host of reasons to sell and if you’re in the Nashville area we’d love to help you buy and sell your home.
3. Turn it into an investment property: And the third option, what if you used that good rate and turned your home into an investment property? Long-term rental, Airbnb, or corporate rental? One of the best long-term investments is in real estate. Are you in a position to start investing in your future? Sure, your new home would carry a higher rate, but those rates aren’t here forever you can always refinance down the road.
before
Remember the advantage of renting out your current home is not only the monthly income, but allowing someone else to pay off your mortgage. So let’s say your mortgage is $2,000, and $500 of that is principal every month, and you rent your home for $2,600/month. You elect to use all $600 over your mortgage payment for any repair expenses on the rental, and to offset the higher interest rate on the new home. You’re still earning over $6,000 the first year, as the renter is effectively paying down your mortgage, so your equity is increasing.
By the end of the year assuming there have been no major repairs, you could cut the $600 in half and now effectively be making $11,000+ between the mortgage paydown and the $300 cash. This would continue to compound and grow your wealth. It’s a simple way to look at your situation a little differently while trying to grow your overall wealth. Maybe you never thought you could get into real estate investing and this is a simple way to get your foot in the door.
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No matter which path is right for you, there are options. So please turn off the news, it’s just not good for you. We hope that this gives you a little insight today on things to consider when it comes to all things homes!
Be sure to check out more of our real estate posts here. Contact us here to work with us + here to talk all things renovations! Have an inspired day!
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