In this episode of the Real Deal Real Estate Show, Larry Harbolt talks about the four major components in putting a deal together and gives you a warning. There are always signs that a market is too hot, whether that’s real estate or housing, and you never want to buy at the top of the market. Learn about what signs you should look out for when investing in real estate.
When interests rates go up fewer people can buy houses and that means that interest rates going up can work against you. Higher interest rates mean that people can’t afford to make the same payments.
The same people who buy at the top of the stock market will make the same mistakes in real estate. If it’s too good to be true, it probably is. Real estate investors that didn’t have the fever in 2007 were the ones that didn’t get hit when the market crashed in 2008. Slow down when the market is too hot, you don’t want to find yourself on the end of the bed feeling like you’re going to throw up because you’ve overextended yourself.
The deals you put together should allow you to endure market conditions. Institutional lenders can make that somewhat difficult because they dictate the terms.
When you are negotiating with the seller you have to realize that every offer is made up with four components.The four components are price, payment, the length of the payback period, and the interest rate. Working directly with the seller to get what they want while you get what you want is very important. Any of those four components can be adjusted to make the numbers work for both parties. Pay attention to the interest rate because it’s one of the tools you can use to create a great deal. Get yourself a financial calculator or download the app on your phone.