Home News Real Estate Investing Tips As Lower Prices Bring Opportunity: Investor

Real Estate Investing Tips As Lower Prices Bring Opportunity: Investor

by admin
0 comment
  • Travis Hanson purchased his first two properties while in law school.
  • He now owns multiple real estate businesses and continues to invest in real estate.
  • He’s on the cash now and waiting for next year’s fix.

In 2009, Travis Hanson attended law school at Texas Tech University before returning to Salt Lake City with hopes of becoming a city prosecutor.

The housing market crashed shortly after the 2008 financial crisis. While in school, Hanson was looking for ways to earn extra income. At the time, he found a cheap home in Lubbock, Texas for about $50,000.

“I remember coming home after finding some of these prices and telling my wife, I mean, they’re ridiculous,” Hanson said.

The couple saved cash and Hanson’s wife had a full-time job at the college he attended. So they started by investing in her two homes in Lubbock.

Hanson recalled that one was $34,000 and the second was about $40,000, with a 3% down payment. I was able to secure two Housing loan at an interest rate of 4%. At about 800 square feet, the house was small, but off to a good start. Each was a two-bedroom, one-bathroom house. Based on other properties in the same area, Hanson estimates the current value to be around $100,000.

By the time he graduated a year later, the couple owned nine properties, six of which were jointly owned by his friends. They were all rentals. After expenses including principal, interest and taxes were paid, cash flowed between $250 and $400 for each asset.

This experience caused Hanson to change his mindset, and he decided to stay in Texas, get a job as a lawyer, and use his salary to continue buying homes.

Of his previous plans to return to Utah, Hanson said, “My mind was just blown and I thought I wasn’t going to go back.

Today, Hanson has more than 109 properties, according to county records viewed by insiders. Together, they comprise approximately 150 rental units. He also owns many real estate businesses, including property management companies, brokerage companies, and an education platform called Education Platform. real estate retreat networkhosts in-person networking events and one-on-one coaching.

“At our peak, we had 650 doors, including multifamily housing,” says Hanson. “I have sold all my apartments in the last few years.

These days, he’s more focused on buying new, high-quality properties that require less maintenance and attract higher-income tenants, rather than quantity. .

Now, as mortgage rates continue to rise, home sales are cooling. According to the National Association of Realtors, as of September, median sales prices for existing homes were down 7% from their June peak to $384,800. Ian Shepardson, chief economist at Pantheon Macroeconomics, predicts that prices could plummet by 15-20% over the next year.

Additionally, high inflation means people can no longer afford to buy property, Hanson said. This further reduces demand and competition, but creates better opportunities for those who want and can buy.

Moreover, during the financial crisis, inflation was not the problem faced by American consumers, Hanson noted.

“I think the fact that people have to make more money to survive the inflation problem is a big, once-in-a-lifetime opportunity, bigger than 2008,” Hanson said.

“We are pretty insulated from the market crash,” Hanson said. “Right now, the national median price for a home is about $400,000. We’re nowhere near that. So in my investment, everything I buy is under $250,000. So even if the market crashes, I’ll take The risk is very small and those homes are just not affected by the rest of the country.”

In fact, he’s sitting on cash and waiting for a sharp correction in house prices in the market so he can replenish his portfolio.

Tips for capitalizing on the coming recession

Over time, real estate always recovers – and that’s what Hanson is willing to bet his cash on. Between 1980 and 2020, median US house prices were 416%.

The best position is to have cash to take advantage of any opportunities.To get there you need to Learning About Delayed Satisfaction, which means resisting the temptation to spend money on things you don’t really need. Additionally, you can use this time to find ways to increase your income.

If you’re not sitting with cash, it’s not a deal breaker, he pointed out. Hanson told Insider that he bought many properties without using his own money.One way to do it is Obtain a line of credit (LOC) A loan that is withdrawn as needed. He pointed out that getting approved isn’t difficult, but you’ll need a decent credit score.

“I know an 18-year-old has a $200,000 line of credit. Just ask. I mean most people don’t ask. increase. “I compete with 18-year-olds who buy properties and I know they have lines of credit with these banks. They may have joint guarantors. [or] There are some people behind them helping out, but I know it’s possible. “

According to HUD-1 documents viewed by insiders, Hanson recently used LOC to purchase the property for around $72,000. We then made several upgrades that increased the property’s value to $130,000 based on market comparisons in the same area. Hanson plans to refinance the property for 85% of the repaired value and use the cash to repay the line of credit. This is a practice he often does.

Don’t be put off by higher mortgage rates. they can always refinance, He said. Mortgage refinancing costs are typically 1% of the loan, which is what discourages many from low-interest refinancing, he said. But Hanson thinks there may be a grace period once things settle down.Many banks may start waiving that fee later so they can remain competitive.

People just need to talk to their banks because these larger institutions are struggling as well, he said. He added, Hanson told Insider that he is in talks with loan officers and is confident that he will be able to refinance without paying a fee in the future.

“I think banks are rolling out programs that allow people to refinance their mortgages for free, with a grace period of up to 24 months, and sometimes longer,” Mr. Hanson said. Said.

Next, Find properties well below the national median home priceThis can protect you from much of the volatility when the market goes down.

According to the Zillow Home Values ​​Index, which measures monthly changes in property-level Zestimates, a typical U.S. home price is Approximately $357,810He added that he also wants to be below the market median in the area he’s buying from.

Finally, Tighten Your NumbersThis means that you will need to determine monthly principal, interest, taxes and insurance costs for every property you survey. This depends on the type of loan or mortgage you take out. Then determine how much rent you can collect based on other similar properties in the area.

You may also like