Epic Real Estate Investing - Why HOMEOWNERS Are STRUGGLING With Monthly Bills (and FOREVER will...) | 1335

Episode Date: August 27, 2024

Are you one of the many who dream of owning a home but worry about the hidden costs? In this eye-opening episode, we dive into why over 80% of recent homebuyers are feeling regret, uncovering the shocking impact of soaring property taxes and insurance premiums. As home values climb, so do these unexpected expenses, leaving many homeowners financially strained. Tune in to discover essential strategies for prospective buyers to brace for future costs and tips for current homeowners to alleviate financial stress. Plus, we'll explore why real estate investment could be your ticket to financial success and why taking action now is more crucial than ever. Don't miss out on this crucial information—hit play to protect your home investment and secure your financial future! BUT BEFORE THAT, hear about 10 mistakes you must avoid before you decide to quit your corporate job! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. After the music download killed the music store and my record label in 2002, I took a job managing the advertising on a major industry website, checking in, taking on more responsibilities, plan office politics, and fighting for promotions. And just as my climb up the corporate ladder was accelerating, I made the decision to walk away. I decided to leave working for someone else for good, and it wasn't an easy decision. And making that decision just a few months before receiving a bonus that would have amounted to half a year's salary, it seemed pretty much. to everyone on the outside looking in, especially my grandmother. The truth was, even I wasn't

sure if I was making the right choice or if everything would turn out okay. But I knew that if I did take the chance, I would live to regret it. As Theodore Roosevelt said, in any moment of decision, the best thing you can do is the right thing. The next best thing is the wrong thing. And the worst thing you can do is nothing. So I took the leap. But if you jump in as I did without proper preparation, you could find yourself overwhelmed by financial strains. frustrated with slow progress or even worse, back at square one, pounding the pavement at job fairs and interviews. The dream of financial freedom can quickly turn into a nightmare if you're not strategic about your transition. So if I were to do it all over again, I'd take these 10 steps

before I quit for a smoother transition into full-time real estate investor. Step one, you want to ask yourself some key questions. Before making any decisions, reflect on your current situation. What's really frustrating you? Is it the job itself, the environment, the people there, something else. Understanding the root of your dissatisfaction will help you decide if real estate is the right move for you because a bunch of what may frustrate you at work may be waiting for you as a real estate entrepreneur too. If you want to sort through this one-on-one, go to R-EIAase.com and pick a time for us to hammer it out together. I'd be happy to. Step two, prepare for financial adjustments. Are you ready to give up employee benefits like health insurance and retirement

contributions? Because these perks, they can be costly to replace, especially if your family depends on you. So make sure that you're financially prepared for the transition by scheduling that last doctor's appointment and understanding the costs involved. Step three, timing is everything. Consider the timing of your departure. Are you in the middle of a major project at work? Is there a bonus or vacation payout around the corner like it was for me? Leaving at the right time can make a big difference in your financial cushion. I mean, in hindsight, hang in tight for just a few extra months to get that bonus. That would have been super helpful. It would have been a total game changer. Step four, manage your expectations. Entrepreneurial.

It's about mindset. It's not just about owning a business. It's about embracing challenges as opportunities and seeing failures as valuable lessons. If you're not mentally prepared for the ups and downs, you might find yourself wanting to quit before you even really get started. The idea of being your own boss, it's alluring. It's romantic. But being your own employee and responsible for your own paycheck, that's stressful. And it takes a significant amount of commitment and discipline to hold yourself accountable. The reality of if you don't earn, you don't eat, that sets in quickly. Step five. maximize your money and credits. You know, before quitting, ensure that you've maximized your financial resources. Max out your real estate loans before you quit because it'll be a while before a bank sees you lendable as an entrepreneur. Apply for credit lines while you're still employed. This access to funds it's crucial for building your business. For example, if you've got a 680 credit score or better, no collections or bankruptcies in the last seven years, Citibank is offering zero percent interest capital for real estate investments and businesses. The program is still available, despite all the in the market right now. I've helped several private clients secure up to $150,000 in just the last

30 days. It might not be around forever, but for now, it is still open to the public at no-cost capital.com. Step six, get your family on board. Quitting your job, it affects everyone in your household. Talk to your spouse and family members to ensure that they're on the same page and ready to support your new venture. If they've seen you try and fail before, show them that this time is different and make sure that it really is. Step seven, build a supportive network. Entrepreneurship, can be lonely. So it's essential to surround yourself with mentors, advisors, and like-minded individuals. Join networking events and online communities to build a support system that will keep you motivated and provide valuable insights. Hire a mentor if you have to. Your environment and community

is that important to your success as an entrepreneur. I wish they would have taught this in high school. Because if you don't come from a rich family or community, you really can buy your way in via mastermind groups and save yourself years of unnecessary struggle just because of the people that you'll If this idea is new to you, like it was me, I understand how tough it can believe how much easier things can get when you focus more on the who you know than how to do it yourself. Great book, basically the same title, by the way. Step 8. Leverage people, money and time.

Leverage, it's your best friend in real estate and as an entrepreneur over up. Use it to your advantage by building a talented team, securing financing, and focusing on high value tasks while outsourcing the rest. This will accelerate your business growth and maximize your returns. To be successful in real estate, you need four things. You need knowledge, you need time, you need money, and you need credit. But they don't all have to be yours. You just need access to them, and you do that via leverage.

Step nine, systemize your business. Create efficient systems to streamline your operation. Identify repetitive tasks and implement technology to optimize them. Delegate everything that you can. I mean, the big game changer for me was hiring a lead manager to take all the initial incoming phone call. And I've been using hire my callorder.com for a while now, and they're great. Now, while this doesn't have to be. to be fully in place before you quit. It's crucial for your long-term success. The sooner you

implement, the better. Step 10. Cash is king. Start with quick flips. Flipping property, it's the fastest way to generate cash flow and learn the ropes of real estate investing. While holding properties, it's going to build your long-term wealth. Flips keep the business running and ensure that you don't find yourself asset rich and cash poor. Once I learned this, I wholesaled a lot of properties. But the journey, it doesn't end with quitting your day job. It's just the beginning. By avoiding these 10 mistakes that I made, you'll have an easier go at it. I'll see you next time. Take care. We'll be back with more right after this. When you go to work for your money, does it return the favor? If not, no worries. You do not

have a money problem. You merely have an idea problem. We're cashflow savvy.com, and we'd like to share a new idea with you around income real estate that can transform your financial future and accelerate its arrival. Go to cashflow savvy.com and download a free investors package. Savvy.com. You do not have a money problem, merely an idea problem. Cashflow savvy.com. More ideas, less worries. Cashflow savvy.com. Hope is not the financial strategy. Let's get back to work. A recent survey from Clever Real Estate uncovered that over 80% of recent homebuyers regret their purchase. And it's not for the reasons you think. And it can't be fixed either. Here's what they didn't see coming. Property taxes.

and single-family home have soared by more than 25% says 2019. On top of that, home insurance premiums jump about 20% between 2021 and 2023, with Insurified predicting another 6% rise by the end of 2024. What some homeowners didn't anticipate is how rising home values, which seem beneficial, also drive up both property taxes and insurance costs. This reality hits hard, with 82% of recent home buyers regretting their purchase. Forty-three percent have even taken on more debt just to maintain their lifestyle. Owning a valuable home doesn't automatically mean financial security. There are many hidden costs to keep that property in good shape. Most buyers don't realize their monthly payment could increase. Over 25 percent of mortgage holders spend more than 30 percent of their income on housing,

which puts them in a financially vulnerable position. Here's how it works and what prospective buyers can do to prepare. Homeownership is the primary path to wealth in the United States, with single-family homeowners accumulating an average of $225,000 in wealth over 10 years. However, this wealth is largely on paper, only realized when the home is sold. There's a common saying, house rich, cash, poor. You heard that? You might own a valuable home, but that doesn't always mean you have cash on hand. Home prices recently have significantly outpaced income growth, leading to the lowest affordability on record in 2023. As home values rise, so do the costs of maintaining them, like property taxes, which increased significantly for homes reassessed

between 2019 and 2023. In some states, property tax increases were more than $600 a year. Local governments sometimes reassess property values to raise funds for new infrastructure, leading to higher taxes. That's why it's crucial to ask your realtor about any upcoming assessments in the area. If your realtor can't answer, it might be time to find a new one. Property taxes rarely go down. They like to go up. the past four years, property tax increases have varied by state, with New Jersey, Connecticut, and New York seeing the highest hikes, while states like West Virginia, Alabama, and Arkansas saw the lowest. Homeowners do have the option to challenge their tax assessments, and in some cases,

it might be worth consulting an attorney who specializes in this, but weigh the costs and benefits before making that move. You don't want to jump out of the frying pan into the fire. Another major expense that can fluctuate is homeowners insurance. The average annual rate in the U.S. jumped from $1,384 in 2021 to $2,377 in 2003, with estimates suggesting it could reach $2,500 by the end of 2004. Natural disasters like wildfires, floods, and tornadoes have driven this spike, forcing insurance companies to recoup their losses, and some were even pulling out of high-risk areas altogether.

In 2003, Florida had the highest average annual insurance rate at nearly $11,000, far above the national average of 2,500. Some states even have legislation to limit how much insurance companies can raise premiums each year. But going without insurance, it's not an option, especially for those with a mortgage. If your home is damaged or destroyed, you must cover the repair or replacement cost. As repair costs rise, so do insurance premiums. So it's crucial to regularly review your coverage and ensure you're with a company that best suits your needs. While we can't control everything, we can prepare. Perspective homeowners should understand that qualifying for a mortgage based on current taxes and insurance rates doesn't guarantee affordability down the line. It's important

to research potential future costs, such as how much homeowner insurance might increase or what local utility bills look like. Even seemingly small expenses like trash removal can add up. So lean on your realtor. They should be able to answer these questions. And just because you qualify for a $3,000 monthly mortgage payment doesn't mean you have to max it all out. Aim lower to give yourself some financial breathing room. For current homeowners struggling with payments, there are options. Start by exploring the county assessor's website, which often has resources for property tax relief. The Consumer Financial Protection Bureau, the CFPB, suggests reaching out to the Department of Housing and Urban Development to see if you qualify for assistance. Also,

call your mortgage servicer to discuss your situation. They might be able to offer a repayment plan or a loan modification. You don't really want to do that, but if you got it, you got it. And don't forget to shop around for insurance. Interview multiple companies to find the best fit. Or you could just avoid all of that and just rent. Because at this point in time, you may be wondering whether owning a home is a good investment at all. It's a logical and irrational question these days. But here's the deal. As challenging as home ownership might seem in the short term, and kind of in the long term too, now that we're looking at everything, especially with inflation driving up costs, you don't really have a choice if financial freedom is important

to you. And that's a big if because here's the reality for our economy to keep growing. Mortgage rates will eventually need to fall back to the two to three percent range. When that happens, home prices will soared even higher, setting new affordability crisis records. That's when the American dream of owning a home will slip out of reach for the average person, possibly forever. I mean, we're already on a path where homeownership is becoming increasingly inaccessible for most Americans. With corporations snapping of single-family homes and converting them into rentals and builders erecting entire bill-to-rent communities, we're headed toward becoming a nation dominated by renters, a renter's nation. So if you're holding out, waiting for home prices,

to drop, you will lose in the long run. And so let me sound the alarm. This is as affordable as real estate is going to guess. So if you're serious about building wealth and securing some sense of financial freedom, you want to hear this through. There is substantial evidence right now supporting the idea that waiting for home prices to drop is a losing strategy. The supply demand imbalance in the U.S. housing market already creates upward price pressure. We've seen it as interest rates have gone up. Prices were unaffected. In fact, they continue to rise. That's That's not supposed to happen. The imbalance, it's staggering.

There aren't enough homes available to meet the need. There's not enough roofs for the amount of people that we got. Even if prices do dip slightly in the short term, as many have been predicting will happen any minute. A prediction that's been made for years now, the long-term trajectory is clear. Demand is relentless. And when mortgage rates inevitably drop, the competition will push prices through the roof. The opportunity to buy low is a fleeting illusion.

And the longer you wait, the few. or doors that will be left open for you. In a world where institutions own most single-family homes, everyday people could be permanently locked out of ownership. So I'll say this again, if financial freedom is important to you. Here are five reasons why you want to join the smart money and buy real estate now. Number one, wealth creation through appreciation. According to the Federal Reserve, the average home price in the U.S. increased by nearly 45% between 2011 and 2021. So if you purchased your home, the traditional way with 20% down and you borrowed the rest from a bank, That's a 2225% return on your investment.

22.5% annually. Can your 401k say that? Even with rising property taxes and insurance costs, whole owners have seen substantial gains outpacing inflation and increased costs associated with ownership. This long-term appreciation is one of the key reasons why real estate remains a cornerstone for building well. When factoring leverage, there's no question.

It's the cornerstone. Before I get to number two, if the down payment for buying a house is an obstacle for you, but you have a 680 credit score, no collections and no bankruptcies in the last seven years. Bank of America has a zero percent interest program just for real estate investments and business owners. I don't know why they don't promote it more, but I've helped several of my private clients get access to up to $150,000 of zero percent money this month. Despite all the recession and crashing market chatter, it is still available right now at no-costcapital.com. Number two, tax benefits and equity growth. Data from the National Association of Realtors shows that the average homeowner's net worth is roughly 40 times greater than that of a renter, largely due to home equity growth and tax advantages.

Homeowners can deduct up to $750,000 in mortgage interest from their taxable income as well as property taxes up to $10,000. These deductions can save homeowners thousands each year, effectively offsetting the impact of rising costs. Additionally, every mortgage payment builds equity, unlike rent, which leaves you with nothing to show for it financially. Number three, long-term stability and control. A report by Freddie Mac found that the average annual rent increase has been between 3 and 5% over the last decade, whereas homeowners, with fixed rate mortgages, have enjoyed a fixed payment. In high-demand markets, rents have skyrocketed by more than 10% in a single year. Bad news for tenants, but good news for owners.

Number four, leveraging real estate for lifestyle flexibility, and this is a good one. According to a study by the Joint Center for Housing Studies at Harvard University, over 16 million U.S. households own rental property. In premium neighborhoods, rent is often much lower than the cost of mortgage. So, for example, instead of paying a $4,000 mortgage payment in that premium area, you could buy a rental property in a different area that generates, say, $2,000 a month. Then, that rental income could be used to offset the $2,000 rent in that premium area where you actually really want to live. By owning an income property, you get all the benefits of real estate ownership, including the appreciation, the equity growth, and tax advantages, while using

the rental income to live in the premium area for half the price, if not for free, if you do it, right? I own 350 rental units before I ever bought my own primary residence because this strategy allows you to build wealth through real estate while enjoying a higher quality of life and a neighborhood you might not be able to or even want to afford if you bought a home there directly. Number five, data from the Federal Reserve Survey of Consumer Finances reveals that real estate consistently makes up about 60% of the total assets of wealthy households. Compared to stocks, which can be volatile or bonds which offer lower returns, real estate provides a balanced combination of appreciation, income, and leverage. Over a 10-year period, the S&P 500 averages a 7 to 10% return,

but with leveraged real estate investments, annual returns can easily reach 15 to 20%. I mean, you don't have to try too hard. I'd say 25 to 30% in reality. Real estate outperforms alternatives in wealth creation. And by all indications, real estate is the final frontier where the average person has a realistic opportunity to achieve financial freedom while they're still young enough to enjoy. And that's key. I'll see you next time. Take care. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe

button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow. You didn't know, home for it, we got the cash flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.