In today's episode, we pulled together a list of questions that we were unable to answer in a recent webinar. The questions range from rising interest rates, market selection, the trade-off between cash-flow and appreciation, property management, cap-ex assumptions, and short-term rentals.

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Transcript

Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.

 

Michael:

What’s going on everyone? Welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum, and today I'm joined by…

 

Pierre:

Pierre Carrillo…

 

Michael:

…and we're going to be tackling some of the questions that you all asked from our AMA webinar the other night that we hosted as part of the Roofstock Academy. So we're going to be taking all or some of the questions we didn't get to, and answering them here. So these are all questions that your peers and fellow investors threw out to us, so let's jump right into it.

 

So Pierre, we had a bunch of really great questions come in from the AMA webinar we did the other night and for anyone not familiar, AMA is an acronym it stands for, it stands for ask me anything and we kind of spun it because my name starts with the first my name starts with an M, so it would be titled the webinar Ask Michael anything. So it was just a webinar where we had tons of folks come on and ask all their real estate questions that they've been dying to ask since and we just went through and answer them and had a really great conversation. Unfortunately, since we had so many great questions, we weren't able to get to all of them. So everything from today's episode comes to us from that webinar. So you want to just start tossing some out, Pierre.

 

Pierre:

Sounds good.

All right. So we have one here that says, with the increasing interest rates, increasing the cost of borrowing money, is it a good time to invest in real estate, what do you think, Mike?

 

Michael:

It's such a good question and traditional finance and economics tells us that with an increase in interest rate, we tend to see a decrease in purchase price, or in list price, which in many markets around the country, I just don't think that we've seen yet and I think that the interest rate is often a leading measure and price can be a lag measure for those lead lag measures. So I have said, and I will continue to say that if the fundamentals make sense, i.e. the numbers that you're calculating makes sense, providing you an acceptable return, interest rate and purchase price are not really prevalent in that equation and what I mean by that is if interest rate hits 10%, but I'm still able to make these properties, cash flow out of cash on cash return, that's acceptable to me, I'm going to move forward with the deal and so I think that if we, if everybody listening, if everyone, all the investors out there continuing to do the same thing, and stop paying attention to the interest rate that as a number, but rather look at kind of the whole picture as the whole pie, it starts to become a little bit easier to digest. Now, if the interest rates are throwing your buy box out of spec, and you can't hit the returns that you're targeting, yeah, maybe that maybe that means let's press pause for a minute, take some time, retool, go get educated, go save up some cash for your next down payment for if and when interest rates do come back into check. But we don't know when that's gonna happen and so if in a year from now, interest rates are at 7,8,9 percent, a lot of us are probably gonna be looking backward and say, man, 5,6,7 percent, maybe wasn't such a bad