BiggerPockets Daily

Borrowing a mortgage is a big responsibility. When you’re an investor, lenders take serious precautions to ensure you can afford it, but many borrowers still default.

A mortgage default can greatly hurt your credit and future chances of purchasing real estate, even for your own use.

So what is a mortgage default, and how does it work? 

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Knowing what to look for when buying a rental property will save you time and money while reducing stress. In this article, we outline seven considerations that you can’t afford to overlook.

Location, location, location is consideration No. 1 when buying a rental property. 

Is the property close to amenities such as shopping? How about public transportation? What about local schools? Is the area safe? Is it family-friendly? 

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When you buy a rental property, you do so with one goal in mind: to generate a positive return on investment (ROI).

A good ROI on rental property typically ranges from 6% to 10%, although this can vary with location, property type, and market conditions. In some areas, ROIs over 12% are possible, while in expensive urban locations, a 4% to 6% ROI may still be favorable.

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Every real estate investor wants to know if there’ll be a housing market downturn in 2024. But perhaps a better question to ask, now and always, is: “Which local markets are most at risk of a downturn?” 

Regional variations consistently play a part in any housing market analysis or forecast. And now we have the most up-to-date Special Housing Risk Report from real estate data provider ATTOM. 

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For all the recent talk about a possible interest rate easing in 2024 and the low likelihood of a severe recession, people are still feeling pessimistic. The Fannie Mae Home Purchase Sentiment Index for November is out, and it paints a general picture of low confidence among both homebuyers and home sellers. 

As interest rates began to climb in 2022, consumer confidence in the housing market began to plummet, reaching their lowest levels by late 2022. Confidence stabilized somewhat in 2023 but quickly reached what Fannie Mae is calling a ‘‘low-level plateau.’’

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We all occasionally fall victim to fallacies—assumptions or beliefs that just aren’t true. 

Consider a deceptively simple logic puzzle known as the Monty Hall problem: You’re presented with three doors, behind one of which is a prize, and you have to guess the door. Before revealing the answer, the game show host makes your life easier by eliminating one of the wrong answers and asks you if you want to change your guess. Should you change it?

Most people shrug and say, “At that point, it’s 50/50, so I’d just keep my guess the same.” This is the wrong answer: You should switch your guess because the other door has two-thirds odds of being correct. 

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What is important for Real Eatate investors to know this week? Managing Editor of the BiggerPockets Blog, Matt Myre is here today to share the top 3 headlines that Real Estate investors need to know about to make better investing decisions. We will cover the Top Cash flow markets in 2024, How Reitement through Real Estate has changed and why, and we will get into how the new Fannie Mae 5% downpayment really impacts investors.

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Most homeowners bought their homes at mortgage rates that were lower than today’s, and that’s caused what’s known as the “lock-in effect.” Homeowners are hesitant to give up their cheap mortgages, which is suppressing available inventory. Low inventory has kept home prices from falling significantly, even as homebuyer demand fell due to rate hikes. 

With mortgage rates down more than one percentage point since their peak in October, the housing market is starting to show signs of rebounding demand. But at what point will the lock-in effect break? And what will happen to housing prices if it does? 

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Low-cost properties are appealing because you can acquire and generate income with less initial capital. However, they are actually the most expensive way to achieve and maintain financial freedom. Here’s why.

Real estate prices and rents are driven by supply and demand. When the number of sellers equals or exceeds the number of buyers consistently, property prices remain low. If prices do increase, the rise will be gradual. Furthermore, when prices are low, more people can afford to buy, leading to fewer renters. This results in stagnant or slowly increasing rents.

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Inflation broadly impacts the overall economy, causing the prices of goods and services to rise. This can have rippling effects across various sectors, including the real estate market. 

Real estate investors, homebuyers, and home sellers need to understand how inflation impacts the real estate market. This can help them make the best decisions when buying and selling real estate. 

We’re here to explain what causes inflation, its impact on real estate, and how real estate investors can benefit even when inflation is high.

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