_{Presented by Astra Properties LLC}
Thriving in Real Estate: Strategies for Success Amid Rising Interest Rates
_{By Nicholas Burrus · 12/29/24
Thanks for tuning in todays read! Read time is roughly 8 mins.}

Top of the morning 🌄 

Happy (early) New Year! 🎉 

This weekend is a great time to plan the year ahead.

Taking time to create a business and personal goal list will help keep you on track and give you a clear vision of what you want to achieve this coming year.

Shameless plug, we dive into some tips and ideas on how to plan for the year in our upcoming AstraCast episode (just sayin).

Maybe you’re planning to purchase your first property, or are looking to add a few more units to your portfolio.

But this may cause you to have an inner objection.

“Now might not be the best time to buy with the future of rates being uncertain”

Well, lets dive into why we think it’s still a good time to buy :-D

Is it a good idea to buy a house despite soaring interest?

Yes.

It’s all about playing your cards right.

The rising interest rates changed the landscape of affordability over the last couple of years. In fact, rates for a 30-year fixed-rate mortgage rose to 7.79% in October.

Sounds like a good reason to skip purchasing a property this year, right?

Not exactly.

Getting into the housing market might be hard, but well worth it if you dive in!

Here are reasons why investing in a house this year is worth it despite interest rates:

Mortgage rates will change 📉 

What comes up will eventually go down, even mortgage rates.

You're not stuck with the same interest rate.

You can take advantage of this by refinancing your investment property at a lower rate. 

Mortgage rates typically decrease as inflation becomes manageable. 

There's no way to know when rates will drop, but if you've been investing in your education, it'll be easier to make a calculated guess. 

You have to pay attention to the changing rates and wait until they make sense for you to refi your deal.

Home values will go up 👆️ 

Don't let the rates fool you; it's not a bad time to buy a house.  

House prices are increasing despite the interest rates. That's because housing inventory remains limited. (Especially here in CT)

Different states or regions have varying pricing trends, but all signs show a gradual increase in house prices. Between the first quarters of 2022 and 2023, housing prices rose 4.3%. 

If you wait too long to lock in a sought-after property now, you might miss the chance of getting it at a good price. 

Fewer competitors 🥷 

Higher rates would put off many buyers.

With fewer competitors on the horizon, it's easier to find a solid deal to buy.

Competitors would usually go into bidding wars for their offer for a lake house that sits in a picture-perfect location. 

With fewer offers, the seller might be willing to hear your offer without you having to bid 50k over asking.

If you can find a great property, you can negotiate the terms. But if you skipped the deal completely, you might regret it later.

Higher house inventory 🏘️ 

The number of houses on the market is 41.8% below typical levels.

Despite this, experts predict that home inventory will rise, and it has already risen 5.1% between September and October this year. 

The rising number of homes actively on sale plus price reductions could signal a shift into a more stable housing market. 

And with more room for negotiations, you might grab that perfect investment at a better price and enjoy its huge upside in the future. 

No reason to wait 🛑 

The rising interest rates + low house inventory might discourage a few investors from acquiring properties.

But despite these market conditions, passing up on a perfect property doesn't make sense simply because of a changing market. 

Fear is temporary; regret is forever!

You might regret your decision later because the same deal won't be available for long.

So take your chance and try your luck.

This is key to getting the best prices on property investments. Check out our guide on mastering the art of persuasion here.

Buyer Beware: Some Sellers Will Hide These Common House Problems  

Buying a property isn't always a smooth, straightforward process. Even a seasoned investor can make mistakes that will lead to expensive repairs. 

Why?

Because many sellers aren't as upfront as they appear.

Many will gloss over a property's problems. 

Many because the property has sentimental value for them

A disclosure document doesn't guarantee 100% protection from misrepresentation. 

Some sellers would also stage a home to make a property appear attractive when, in fact, problems are cleverly hidden by strategically placed decors.

Always do your due diligence to protect yourself from potential problems that may be hidden under a rug! 

Here are common problems that you may miss: 

Water damage 💦 

Leaky pipes could weaken the structure of a house and cause a widespread mold problem. So always check for signs of water intrusions:

• Leaky, rusty plumbing

• Moldy odor

• Dampness in closed spaces like the basement

• Brown stains on the ceiling

• Visible cracks on the walls

Move furniture around, look under the carpet, check what’s under the sink, and shine a flashlight under the bed.

People can also hide issues with a fresh coat of paint. 

Ask them when the last time the walls were painted .

If it's fairly recent, there could be a chance they're hiding water stains. 

Contamination 😷 

Old houses - those built before the 70s - are prone to contamination.

Some old homes have contaminated soils from installing oil tanks underground, and others have traces of lead paint and asbestos. 

Pay close attention to the painted surfaces, soil quality, and odd pipes sticking out in the yard.

These could clue you in on an old property's history and potential problems. 

Structural problems 🛖 

Some caulk and putty might conceal small cracks, but some of these "imperfections" could lead to potentially costly and widespread problems.

• Uneven window and door frames

• Tilted ceiling

• Deep, jagged cracks on the wall

• Cabinets not closing properly

• Mold in the basement

A shaky foundation can lead to structural problems that'll take a good amount to repair.

Poor insulation 👎️ 

Walk into the property to get a feel of the temperature. If the bedroom is oddly cold, but the bathroom is warm, investigate. 

A subtle shift in the temperature is a sign of poor insulation. 

Poor insulation can lead to a host of problems, such as:

• Attracting pests

• Mold on the walls

• A dank smell

• Increasing energy bills

Seeing the property in person, getting a feel of the temperature, and looking for tell-tale signs like chilly drafts, water leaks, and signs of pests will save you a lot of problems caused by poor insulation. 

Also, check the age of the water heaters and HVAC systems because outdated, broken systems can lead to poor insulation and structure damage. 

Noisy neighborhood 🔊 

Blaring horns, noisy neighbors, barking dogs - these noises are often downplayed by sellers.

You can avoid this trap by going to the neighborhood unannounced and walking around the streets.

Chatting with the locals during these walks also helps get a more objective view of the neighborhood.

Is it haunted? 👻 

Don't think it's weird to ask the seller if a property is haunted.

In some states, sellers are not legally required to disclose a property's "emotional defects," but ask away and do your research! 

Check if a death has occurred in the property - natural or otherwise.

In 2007, a buyer sued a real estate agent and homeowner for failing to disclose a murder-suicide that took place in the house she bought for $610,000.

No one wants to live on a crime scene 👻 

Bottom line: These are just some ideas to keep in mind when grabbing a property. Adjusting your repair budget as needed will save you money down the line, and help you be a profitable investor!

If you're not comfortable with the vibe of the house or its history, you might find it hard to live in it or find tenants. 

Catch the latest episode of the AstraCAST podcast!

Have you subbed to our podcast yet?

You can catch me and Marcos on YouTube, and soon Spotify! Catch up with us as we bring on guests from all parts of the industry covering everything from real estate, personal development, to growing a business through acquisitions, rentals, and renovations.

Don’t be shy, check us out here!

See you next year 😉