Recently, I have had a number of my core investors start pulling back from buying investment properties. The reasons all ranged from poor housing market, prices will get cheaper and my favorite being no banks are lending money!
It is very easy in this market to "give up" or even agree with any or all of these reasons.. Trust me, for a couple of months.. I did!
Finally after sitting down, and just stopping everything I was doing and forcing myself to think.. here is what I came up with..
Learn the numbers.. I created a very easy spreadsheet that shows my investors the rate of return.. When they find out they are getting 9, 10 or even as high as a 15% on their money, there fears quickly fade away. If you have questions about how to look at "the numbers" for a property, please let me know and I can show you in minutes!
The prices will get cheaper claim, is a little harder.. Everything the "media" writes keeps making claims about another year of falling prices... So when the question of "Why should I buy now, when I get wait a year and get it 7% cheaper." I turn the question back to them and ask them what they are going to do with their money instead. NO investor is going to let 50,000 plus sit in a bank account and just collect 2% interest. And the stock market is below 8k!! So they can not put it there. So the question is where are you going to put your money? Even if prices do fall 7%, your property will still be cash flow positive, you will have made 9% of your down money back in your pocket and paid 1 year off of the mortgage. Investment Properties are totally seperate entities and needed to be treated as such.
And finally "no banks are lending money" is the scam of the century. While banks have pulled back to risky first time home owners, seasoned investors have nothing to fear. I have 2 local banks in my community that still only require 15% down and still can close in 30 days and are both on my speed dial. There rates are low, my line of credit is down to 3.50!! That is just INSANE!!
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