Epic Real Estate Investing - How is your Turnkey Rental Being Affected by the Current Market | 1130

Episode Date: March 9, 2021

No doubt, COVID-19 has caused a financial burden on the country. On the other hand, the housing market is booming due to a long-running failure to build homes for the people who needed them post-recession. Lend an ear to today’s episode as Mercedes, The Turnkey Girl expands on the aforementioned statement and reveals how you can take the advantages of the current market situation, using turnkey rental solutions.   Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. So you want to be a real estate investor, but you don't want to do the work. If there were only a way where someone else could do it for you, now there is. Tune in here each and every Tuesday on the Epic Real Estate Investing Show for Turnkey Tuesdays with your host, Mercedes-Tores. Hello and welcome, welcome to Turnkey Tuesdays brought to you by Epic Real Estate Investing. My name is Mercedes Torres, your turnkey girl, and I help busy professionals create passive income through real estate investing so you don't have to work so hard and maybe even retire sooner.

So Matt and I created this show to share tips, advice, in real life, real estate experiences so that you too can create passive income in your world. That said, if this is your first time here, so glad you made it, Make yourself at home. If this is not your first time here, welcome back. No doubt, COVID-19 has caused a financial burden on the country. I mean, so many have been effective. There have been massive layoffs.

I mean, people have lost their jobs that have been at their jobs for decades. Many have been forced to take on an early retirement and have taken a hit on their retirement. And there have been households that have lost the total income because both parents have lost their job. So with all this happening, why is the housing market booming? I mean, this pandemic has seen soaring home prices in a new Urban Institute report written by Jerusalem DemSaz in February of 2020. She says that these trends are part of a long-running failure to build enough homes for the people who needed them post-recession. This has reduced the pool of potential homebuyers and the effect of COVID-19, which have exasperated all of these trends. Researchers found that if the country continues down this same road, over the next two decades, the U.S. home ownership,

rate is set to decline to 62.1 percent, and the losses will be concentrated among younger people. Across the country, housing prices are rising quickly. According to the S&P CoreLogic case, Schiller National Home Prices NSA Index, basically, they track price changes of single-family homes. Well, they indicated that November of 2020, housing prices have risen 9.5% from the previous November. At the end of 2019, the average home was worth approximately $245,000. In today's world, March 2019, it's now worth more than $266,000. $Refin's chief economist, Darrell Fairweather, believes the increase in home value is mostly due to the demand. People are scrambling to take advantage of these plummeting mortgage rates.

Due to the falling mortgage rates, the cost of borrowing money to buy a house is dropping. Mortgage rates have been falling steadily for a while, but they fell dramatically. in 2020, reaching a record low of 2.65% in January of 2021. Now, this is a big deal. Let's say you bought a house for $300,000 just a year ago before COVID-19 hit the U.S. If you locked your mortgage rate at a 3.73, you would end up paying $498,000. $940 over 30 years. If you bought your house in 2020 at the low of 2.67% mortgage rate, you'd pay $436,337 at the end of 30 years. That's the savings of more than $60,000. Think about it. What can you do with $60,000? That can buy you another investment property.

So this situation is inducing a lot of demand as America's biggest generation ever. Millenniums have aged to the prime home buying years. Data suggests that people who can take advantage of these rates are doing so right at this moment. In fact, mortgage applications have increased 33% compared to a year ago in August and 27.1% in November. compared to a year ago. I mean, just our own lender, Chaley Ridge of Ridge lending, her turn time used to be 48 hours to underwrite a loan. She is now at a 10-day underwriting turn time due to the amount of application she's getting. It is unheard of. Now, having said all this, I'm using the example of a primary residence, but everything that's,

that I just share, it also applies to any property that you own, including turnkey rentals. Now, depending on the area in which your property is located, your equity will likely fluctuate. But no doubt, your property value has likely increased during the pandemic. And I'm sure you're asking yourself, well, I own a property, whether it's your primary residence or a rental, The fact is, if you own a property that now has instant equity, not to mention, massive demand, I'm sure you're asking yourself, what should I do? Should I sell it? Should I refinance it?

Should I do nothing? So, the last thing, my friend, that you want to do is do nothing. I mean, doing nothing is going to get you nowhere at all. So then that takes you to the next topic of, should I sell it? I'm sure you're wondering. While your asset is in huge demand, would it be smart to sell? I mean, after all, you would be getting top dollar for your property, right? But what if you refinanced your property since mortgage rates are super all-time low? and what if you took the equity out of this property that you own, whether it's a rental or your primary residence,

because think about it, the equity that you did nothing to build, what if you took that equity out and you bought a turnkey rental? A turnkey rental that pays you every month, hence passive income. I mean, after all, with the mortgage rates being a record low, your payment will likely stay in the ballpark same rates that you're currently paying now and you get cash out. Like money in your pocket.

Now think about it. You'd be putting to work free money. Money you did nothing to earn because the market created the equity. You didn't create that equity. You can kill two birds with one stone by doing two. transaction at the same time. The right lender can do your refinance while you're qualifying for a purchase of a rental property because they have all your financials so the right lender can forecast exactly what you have at hand when you refinance and buying your next investment property

or your turnkey rental. So when you acquire your rental, property with the proceeds of your refinance, aka the equity that you're drawing from the property, the equity that you did nothing for, and you buy an asset, you make sure it goes into a cash flowing property so that those numbers will affect you positively. That cash flow will now be classified as income for you. This is key because this, putting your hard earned equity from your property to work, this is called an infinite return. And an infinite return is what creates wealth. Now, just in case you are not clear on what an infinite return is, this is when you just don't have any of your own money in a deal. But you're still receiving cash flow from this deal in which you have

none of your own money. Now, you may say to me, but Mercedes, I did put money in the deal. I refinanced my own property and I pulled the equity out of it. Right. You did. But you did nothing to earn the equity. So in essence, it's free money. And if you take it. And if you take it, you, take that money and buy a rental that pays you, you are now creating a return from money that was created by a market. Now, you had no control over the money that you made, the equity that you made while it was sitting in your rental or in your primary residence. And that's the cool part. So it's free money. Hence, an infinite return. The real estate market has not been affected negatively due to the pandemic. Quite the contrary, it's been affected positively. Now, I'm sure you're thinking,

because I get this question all the time, well, during the pandemic, nobody pays rents. There are rent moratoriums and there are mortgage moratoriums. Well, that could be so. But let me tell you, According to the Rental Housing Journal, rents collected in February 2020, we collected them as a nation and a whole 81%. So, 81% of the renters out there in all of America paid their rent. In February of 2021, 71, 71% of 7.2% of American renters paid their rent. Now, that's not even a 2% difference. So, why would you not invest in a free property that makes you money and contributes to creating personal wealth for you? And not to mention, a legacy for your family. That's it for today.

I truly hope that this insight or this information got your wheel. turning. And if this podcast made you think, spread the word, will you? Share it with someone that you think may benefit from it or leave us a review on iTunes because it will absolutely help somebody make a difference to their financial future. And if you'd like to reach out and need our help to help you creating a legacy in your world, do not hesitate to reach out to us. feel free to reach out to us at cashflowsavvy.com. Download the free guide to passive income. It is right smack in the middle of the page,

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