In the short-term rental riches will discuss investing in real estate with a specific focus on short term rentals quick actionable items to wire. Scale your portfolio I’m your host Tim Hubbard.

Welcome back to the short-term rental riches podcast so I was in the US a few weeks ago at a investment conference actually not a real estate investment conference I like Canada I like to diverse finest mother things this was a mining primarily a mining precious metals conference but something happened when I was staying in the hotel there and I went to the cafe Starbucks and I bought a coffee and a bottom banana I didn’t check my receipt until I’d already paid I didn’t really question the prices it did seem very very high though and then I looked down at the receipt and realize that I paid $2 for one banana $2 at that is the most I’ve ever paid for banana my life in fact for $2 down here in Columbia. You can buy more bananas and you can imagine so this week that’s all to say inflation has hit us right inflation is higher than it’s been in a 30 year period according to the U. S. department of labor’s latest published data. The US inflation rate for the last 12 month period was 6.2 percent that is huge and as a real estate investor that uses a lot of leverage this is really important so this week I want to talk about inflation whether or not you should refinance and pull out some of this equity and a reason a couple reasons why you might not want to and stay tuned because I want to give you a few of my Linda referrals as well I just close 3 loans last week and I’m still working on some new ones so let’s go ahead and jump right into it so as I said the US inflation rate is higher than it’s been in almost 30 years and from what most economists can tell for most people I follow can tell that’s not going to be slowing down anytime soon so this inflation with all of our prices going up our real estate has been going up as well now real estate has been going up because we have a housing shortage we talked about that a prior episode so we’ve got a couple things going on here we’ve got raised asset prices from inflation and from appreciation so it’s very likely that you will have a lot of equity in your properties if you’ve owned properties for a few years so should you pull that equity out my short answer is yes. Now I know that make some people wary and cautious but I want to talk about 3 reasons why you should pull that out and then we’ll talk about when you shouldn’t pull that out so number one. If you think you can pull out your equity. Let’s say you’ve got $50000 in equity and you can borrow at 4 percent well all you really need to do is find an embarrassment to do better than 4 percent right and then that money is paying for the money that you borrowed now I’m referring when I when I talk about refinancing I’m assuming you’re getting fixed long term debt like a 30 year loan so if you can pull that money out and you can do better than the interest rate your pain on that money in some other form of investment or more real estate which I highly recommend them I think you should do it we’re gonna get to the reasons why you shouldn’t do it but that’s number 1 now I might be thinking I don’t know what to put this extra money into there are lots of things to put your money into you just need to export you can put it in a more real estate course that takes a little more time but you can put it in passive real estate investments from friends or family or colleagues or someone you met at a conference you can put it in 1 of their deals you can put it into precious metals like gold which is history’s longest form of money and it is a good store of wealth although when technically call it investment doesn’t pay you any money back right but technically speaking historically speaking gold has been a very good hedge against the dollar so it doesn’t lose its value like the U. S. dollar does the U. S. dollar from 1990 just to give you a little example 2 2020 it’s it’s lost over half of its purchasing power which means if you had $200 back in 1990 it’s only gonna buy you $100 or less of actual goods and stuff today so if you’ve got money in the bank as Robert Kiyosaki would say. Cash is trash if you’ve heard Robert kids sake the rep that wrote rich dad poor dad he says that all the time cash is trash because of cast cash is making 0 percent and inflation is 6 over 6 percent minimum one year just to give me an example you have $100000 in the bank you lose $6000 and purchasing power after one year sell pull the money out if you think you can do better than whatever rate your pain to pull it out. Pull the money out if you think inflation will continue and from the trillions and trillions of dollars that were printed I think it’s going to continue no matter whether we like it or not and now this is world wide as well I mean we’re seeing prices rise all over the place so if you can lock in a low interest rate today at historically low interest rates and you think inflation’s going to continue. Then that’s another good reason to pull it out number 3. Pull your equity out if you think the market is going down or if you think the market’s going to crash now that probably sounds crazy why would you want to pull out and have a larger payment when your value of your property is going down well I would say because if you have fixed financing especially if it’s for 30 years then it doesn’t matter what the value of your property is if your property was worth $1000000 and it dropped to $800000 but you don’t sell it then. You don’t need to worry about that decreased property value especially if you’re running it out hopefully you are that’s what this show is about we talk about rental investments mainly short term rentals but these both come into play here and if you listen no prior presumed rents are going up so even if your property value goes down as long as you have a fixed rate for a long period of time and if your rent is covering that mortgage payment then you’re gonna be okay so those are my 3 reasons and that leads me to the reason why you shouldn’t pull out your money and I’ve got 2 reasons for it but the first one I just glance that is if your mortgage payment can’t be covered by your rents I should say your mortgage payment all of your expenses on that property can’t be covered by your rent you don’t want to have more expenses than income coming in that’s a bad recipe so you don’t want that. Hey just want to ask you guys real quick favor if you haven’t already left this review if you wouldn’t mind heading over to iTunes or Spotify wherever you’re listening to the podcast and just leave us a quick review we really really appreciate it and if you know someone that you think would find value in any of the episodes that you’ve listened to you could just take a screen shot send it over to that’ll help them but it’s also going to help us grow a little bit too and lastly we’re on YouTube so if you prefer you to you can head over to short term rental riches and you can find us there as well thanks for listening in and thanks for all your great. Let’s jump back in the number 2 reason that you shouldn’t refinance in my opinion is if you’re getting ready to sell of course you don’t want to pay. A bunch of loan fees refinance fees and points and underwriting fees all these things and go through the paperwork and hassle because these things can take a little bit of time if you’re planning on selling your property but I would say if you’re hesitant about selling your property or maybe your 5050 and you don’t think it’ll be. Sooner than a year I think you should really consider refinancing and this leads me to my next point which is a really big misconception about real estate prices in our wealth. Let’s say you have $10000000 and property but most all of that is in equity. Well you might think rich but you’re not because equity is not permanent it’s not fixed it can go away if the market crashes and all that equity you have built up in this $10000000 portfolio gets washed away well then you don’t have access to it so unrealized gains. Are not real until you realize them so if you face any of these scenarios where you have equity and you think you can take it out and make more than the money you’re paying in I know that you can just got explore a little bit I wouldn’t really really consider refinance your properties like I said I just did 3 last week I’m working on more and again if you have challenges with the lender there’s lots of lenders out there you might get denied but keep trying I’ve gotten denied recently it happens all the time you want to give you 3 referrals for lenders that you can check out so these are all nationwide by the way and this is in the U. S. but the first one is I company I haven’t used personally but I believe that they are specifically geared towards short term rentals and that’s host financial we’ll put links in the show notes and we will also get these on a recommended resources on our website at rest methods.com if you haven’t checked it out yet had there because there’s a lot of good info we’ve got all kinds of different recommendations in terms of furniture and software to use and we’ll have our lenders on there and everything so and it’s free so go ahead check that out it’s a rest methods.com under recommended resources so host financial this is one option vizio lending is who I just use that one say that they were easy to work with in fact it was a total pain in the **** it took a really long time then this is the thing to remember about getting a loan you deal with the lender when you get your loan after that everything’s on auto pilot right you’re probably gonna put up your your mortgage payments on automatic payments and if you never change anything you’d probably never talked about Lindor again so even though it might be difficult in the beginning make sure you’re shopping around and stick with it until you get something done. Because you won’t have to deal with that headache after it’s complete so those are 2 referrals and the third one is of a personal broker mind that I’ve worked with a lot and her name Shannon she’s from mutual of Omaha all put her information online too she really knows how to get some loans done I’ve done a lot with her too and she works more with the smaller residential properties so one to 4 units although she can do some stuff over 4 units as well so we’ll have those in our recommended resources make sure you check them out and I just want to leave you with one comment and and that’s it most of the time we’re managing our real estate portfolios but we also have to manage the equity in our real estate portfolios as well we want that equity to be working for us in an environment where rents are going up and where investors invested in rental property. We’re in a good position so talk to these lenders talk to any lender you can really consider situation if you have equity I highly suggest pointed out that’s what I’m doing it’s gonna help you beat inflation so when you have to pay $2 for banana one day you’re not going to be as a. So until next week I hope they give you a little more inside check out our resources and catch you back here there’s so much money to be made the short term rentals but it all starts by having the right property if you guys haven’t yet seen my free ebook on our website rest methods.com head over there and get a copy it’s going to break down what I look for in a property in some great short cuts so that you don’t have to spend hours and hours researching at over rest methods.com and you can grab your free copy there if you want a crash course in everything I’ve really learned to short term rentals in over 5 years managing over 15000 Gasol recorded on our last live event and I’m happy to say we broke it down really nicely into a bunch of different modules that you can watch at your own pace it takes you from start to finish from finding a property we talk about analyzing the property but then also some of the more important pieces how to find your team and how to set up everything so that you can run your operation is passively as possible and free up your time you can find that it rests methods.com forward slash virtual.
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