The real estate market is currently in turmoil as mortgage rates hit over 7%. The times of fast, cheap money are gone, at least for the time being.
But real estate is always an excellent investment if you have the right mindset. Real estate is a tricky topic to discuss because many people don’t have access to the amount of money it takes to get started.
However, I will continue to cover real estate in my Financial Independence through Real Estate series (part 1, part 2, part 3) because I believe everyone can benefit from rental income.
Whether you are renting rooms or buying real estate investment trusts, there are a plethora of ways to make passive rental income. With that, let’s jump right into the current real estate market.
RETIRING WITH REAL ESTATE
With high prices plus high-interest rates, housing is unaffordable to most people. Some alternative lending solutions are entering the marketplace, such as 40-Year interest-only mortgages. You must do some serious due diligence to entertain these concepts.
I just moved to San Diego, and life is much different than in my small town in Florida. Moving to a big city requires a big mindset. If you don’t keep your budget under wraps, you will soon fall victim to overspending.
As you accumulate wealth, you’ll want to increase the size of your emergency fund. It also may be a good time to separate your home maintenance fund from your emergency fund. This allows you to visualize your future personal and home issues more effectively.
It’s common for private schools to cost between $10,000 to $20,000 a year per student. But what if you invested in real estate instead of paying for a private school? What option gives our child the best opportunities at age 21?
People believe buying rental properties is the only way to make rental income, but they are wrong. Most people have the opportunity to rent rooms for passive income. It’s not for the average person, but it can quickly make you rich.
Are you heading to retirement soon? No matter the timeline, you should always plan for your future without working. Rental income can help you retire in style and comfort, but you must start preparing today.
The best thing about working remotely is that it allows you to choose your location. My first choice for everyone is Alabama because you can afford to buy a house and lead a good life. But you can live anywhere, so choose somewhere you can get ahead financially.
There has never been a better time to share your things. Today, many websites allow you to share your house, land, garage, parking space, car, and appliances. The sharing economy can give you the passive income you need to beat inflation.
I am a huge fan of small cities, especially if you bring your own income. By this, I mean to have steady streams of passive income that make your location independent. I began writing books to make money from anywhere, including my small town in Florida.
Fall is the best time of the year. Thanksgiving and Christmas are right around the corner, and everyone is in a better mood. It’s also a great time to reflect on our real estate holdings and future—what better time to prepare for our future real estate conquest than over turkey?
REAL ESTATE INVESTING
I always talk about renting properties and rooms, but there is more to it than discussion. You actually have to be ready to become a landlord. Supervising tenants isn’t for the faint of heart, but if you are organized and assertive, you can be a successful landlord.
Home prices remain evaluated, plus mortgage rates have doubled in less than a year. How can an average family afford to buy a home? Maybe they move to a remote area and homeschool their kids.
I am a successful house hacker and a budding writer, so which is the better way to make money from home? The short answer is both. One requires little time to start, but you must deal with tenants. The other takes 2-3 years to exploit but is highly portable.
Is now a good time to take a home equity loan against your house? Interest rates are high, and you may lose equity in your house. However, it is also a great time to deploy cash into stocks, bonds, crypto, and businesses.
The economy may force you to buy an expensive home because there is simply nothing else on the market. However, you can buy an expensive home safely by increasing your income and renting rooms.
My road trip from Pensacola, Florida, to San Diego, California, was a great time to reflect on my passive income journey. I attribute renting rooms to getting my wife and me out of debt. Along with a positive financial mindset, of course.
Can you rent rooms to friends? Of course, but there has to be mutual respect for each other’s position. A tenant is always right, but the landlord has rules. If you can balance your relationships with business, you both can make a lot of money.
Times are tough during a recession. Everyone is looking for ways to increase cash flow to pay for higher gas, food, and energy costs. Renting rooms during a recession is an excellent way to neutralize inflation and job losses.
Do you really need a self-storage container? How much stuff do you have, and how much stuff do you need? Getting rid of excess belongings will make you feel lighter, plus put $80-$200/month back in your pocket.
SAVING FOR A HOUSE DOWNPAYMENT
Do you think you can save for a house during a recession? Of course, but it’ll take courage to leave your comfort zone. Working 40 hours a week will not get you a large down payment.
You must create an online business, rent rooms, invest in the stock market, and leverage the gig economy. I broke down each scenario, so you have no excuses for not saving.
- Saving for a House Down Payment #1: Single, Small City
- Saving for a House Down Payment #2: Single, Big City
- Saving for a House Down Payment #3: Couple, Small City
- Saving for a House Down Payment #4: Couple, Big City
- Saving for a House Down Payment #5: Family, Small City
- Saving for a House Down Payment #6: Family, Big City
BOOK TAKEAWAYS
Do you want to get deeply involved with real estate? Becoming a real estate agent is perhaps the best way to leverage your situation, relationships, knowledge, and experience to become a real estate investor.
CONCLUSION
Real estate is a necessary ingredient for building wealth. It is challenging to grow your net worth and portfolio without having real estate holdings on your side.
The market is scary right now because of many unknown things. Will interest rates keep rising? Will house prices fall? Will real estate investors keep buying homes in your neighborhood?
No matter the future, finding a way to leverage real estate is your duty. That is if you want to build streams of passive income and generational wealth for your family.
- Financial Independence through Real Estate 1 (Amazon)
- Financial Independence through Real Estate 2 (pdf)
- Financial Independence through Real Estate 3 (Amazon)
You can find the other articles and books in the Financial Independence through Real Estate series above. Until next time, Good Luck!
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