Want 6.375% Int. Rate? Here’s How We Can Get You It on a 30% Down – Fixed for 30 Years

The current relatively high interest rates are a concern for many investors and may even discourage some from taking action. Throughout my long career working with real estate investors, I have learned two important foundational aspects of investing:
1. Investors often focus on a single aspect of an investment, assuming it is the sole factor determining the success or quality of the opportunity.
2. Many investors believe they are knowledgeable enough to make decisions based on a hunch or gut feeling, rather than evaluating and analyzing all alternatives.

Let me give you two examples:

Example 1: Current Interest Rates
Interest rates are around 7.25% with 30% down. What if I told you that you could get 6.375% or even 6.25% on an investment property today? This might sound attractive, but it depends on the overall scenario. To achieve a 6.375% rate, you would need to pay three points, which equals $6,300 on a $210,000 mortgage. This would add up to $105 a month if you spread the cost over 5 years.

Example 2: Unutilized Equity
Consider an investor who bought a property over eight years ago for $135,000. Today, it’s worth $285,000, but the rent is “only” $1,650, and the property is in a cash flow-challenging state. The owner doesn’t want to sell because of the favorable 4% interest rate they have. This situation highlights unutilized equity.

In both examples, it’s essential to analyze the full picture rather than focusing on just one aspect. Understanding all parameters and alternatives helps in making more informed investment decisions.