The April 2o22 WealthBuilders Real Estate Workshop was our best one yet. Our attendees were so engaged and asked wonderful questions! We answered as many as we could in our live Q&A sessions, but we couldn’t get to them all. So, in this episode of The WealthBuilders Podcast and corresponding blog, our real estate coaches chip away at some of the remaining questions. After all, the best approach for how to learn about real estate investing is to ask people who are already in the game!
(I’ll give you a spoiler alert now: if you are curious how to learn about real estate investing, your best option is to purchase the WealthBuilders Real Estate Workshop USB. It has 20+ real estate investing courses, including several Q&As like this one. Click here to purchase.)
How to Learn About Real Estate Investing: 6 Questions and Answers
1. With such high housing demand, what do you think will change in the next 18 months to 3 years?
The Fed has confirmed that they will continue to raise interest rates to curb inflation. With interest rates going up and a trickle of foreclosures, housing prices are likely to soften. However, experts say that it will take builders 5 years catch up with the demand. So, supply might increase—but probably not by too much in the next 18 months to 3 years.
The average investor who isn’t in the know might throw up their hands and wait until interest rates and supply improve. However, if you stick with our tried-and-true WealthBuilders real estate formulas, you can succeed in any economic climate. The first step for how to learn about real estate investing is to understand the market.
2. What are your recommendations for finding reliable contractors?
The first place you should look for referrals is with the people who are already on your real estate team. Your real estate agent and property manager are in that world and undoubtedly have advantageous connections.
In addition, WealthBuilders is starting a Referral Network. It’s in the beginning stages, but the plan is to leverage reliable connections that our coaching clients have found across the United States.
3. How do you recommend using cost segregation (accelerated depreciation) with real estate?
This is a valuable strategy for real estate investors who plan on keeping properties for an extended period of time. Accelerated depreciation allows for higher tax deductions in the earlier stages of a property. Talk to your accountant about how to incorporate this into your real estate tax strategy.
4. I want to get equity out of my home, but I already have a HELOC. Should I pay off the HELOC before I take out another?
In most cases, you would want to pay off your HELOC first. Not only that, but your lender will probably require it. If your HELOC is in second position, banks generally won’t want to move to third position. A bit more on that:
First Lien: Primary Mortgage
Second Lien: A Secondary Mortgage, such as a HELOC
Third Lien: What would happen if you were to take out another loan!
5. Is there a benefit to a shorter inspection window or waiving the appraisal contingency?
If you’re the seller, the shorter the inspection window, the better. But if you’re the buyer, it depends. Sellers are prone to take your offer more seriously if you can move quickly. The inspection is one of the most important things you can do, so be sure you do it! If you want to waive the appraisal, you really need to know what you’re doing.
6. During the Real Estate Workshop, Billy said that cash flow is the key, but the secret sauce is spread. Please expand on this.
With a buy and hold property, cash flow is the extra money you make on your tenant’s rent after PITIM. With a fix and flip, it’s the net proceeds (your selling price minus the buying price + repairs.) On the other hand, spread is the difference between the price offered by a buyer and the price asked for by the seller. You make money when you buy, not when you sell. The spread and the cash flow are one in the same because your spread will inevitably determine your cash flow.
If you weren’t able to join us at The WealthBuilders Real Estate Workshop last weekend, I highly recommend our conference USB. It includes all of the video, audio, and PowerPoints from the event and is a great tool for how to learn about real estate investing. (The PowerPoint slides contain dozens of graphs to help you understand the current economy in relation to real estate investing.) Click here to learn more and order your Real Estate Workshop USB today!