Well there's a lot to say about this and there's a lot of very misinformation and odd information. I would say it's the good, the bad, and the interesting out there on the bathroom wall called the Internet.
So, should you sell your house in a recession? Let's go through three points to help you evaluate and decide. Number one is evaluate your current housing market, not the national market, your current market, down to your zip code. Number two, identify the opportunities and the risks during this recession. What do you see that's going on in your market, in your state, again, down to your zip code? And number three, decide whether to sell or hold.
Number one, evaluating the current housing market, I think you have to be really clear about this. So personally, I think there are opportunities everywhere during a recession. And there are so many note opportunities in this recession because of the heightening in 2000, 2021, 2022. Insane housing prices when the West Coast was moving in, the East Coast is moving in, people are geographically relocating because of the pandemic. Fascinating what got blown up, and now that's settled back down, so many people are upside down.
Should you be in real estate? That's up to you. But that's not what this is about. This is about your house. Personally, do you sell your house in a recession of this kind? How do you evaluate your current market? You have to understand what's going on in your market. Is there a lot of selling going on? What's also on the converse of that if you actually do sell, are you going to buy again or are you going to rent? Rent is out of control in a lot of markets. So there are some markets where rent has not moved a lot and there's some markets that rent has doubled. So are you really going to move out of selling your house to then go into a double rent situation? You have to really look at the housing prices, the rent prices, you have to look and evaluate what are your alternatives are, versus just staying and waiting this out a little bit. You also have to look at the recession indicators of inflation and interest rates. And if you did sell, it means the buyer is going to come in at a higher interest rate, that's not your problem, but you will have one if you want to go buy again. Clients of mine have sold, not thinking through, now I'm going to go into a new property and I'm going in an interest rates that are double what I was paying. And again, do you do that fixed? Do you do that variable? Given the volatility of the market, all of those considerations have to be in hand, which is why our teams are phenomenal in helping you evaluate. We know how to run spreadsheets and numbers and cashflow analysis to help you decide based on real numbers, not emotion. And a lot of you, you make decisions on emotions, not real numbers, which is why you need a team around you like I have had around me my whole life.
Number two, so you have to identify the opportunities and the risks in the recession. So as you look around your obvious risks, we've already identified, which is you're going to have to go into a new property if you choose to buy at probably double the interest rate you were at. Remember early COVID, there were mortgage rates down to 0, 1, 2%. I know somebody in California who just bought and are paying 8.2% for a house. I mean, are you really ready to do that spread and what is that going to cost you to do it? On the other side, you've got to look at the risk of selling now and you maybe you are in a good mortgage, and now you're going to go rent and you didn't pay attention to the rent rates and you're in a double rent market. Meaning, a year ago, you could have got a place for a thousand. Now it's $2,200 for the same place. So you really have to look at the analysis of the risk of it, but there's also opportunities. There's opportunities that people that are going into foreclosure, as I mentioned, because they bought a $600,000 house that's now at a $350,000, $400,000 appraisal and valuation, and banks are foreclosing. And that's going to pick up as we see this next year coming in. So there are opportunities to maybe be buying. Does that mean sell your house for that opportunity? Or do you use that as a rental property? So I think you really have to understand the opportunities and the risks in your market.
Now let's head number three deciding whether to hold or sell your property. So I'm going to go through five very critical pieces as you assess your situation. So that is the number one thing. What is your personal circ*mstances, and I've said that forever even when it came you know in 2006, 7, 8 when I was writing the Millionaire Maker book, about using the equity in your property, using your HELOC. Very loudly then, and I'll still say it now, is your personal individual ability to make money. Like my ability to make money and do what I do is in my wheelhouse, my rules. You don't follow my lead if you don't have the ability to turn on and turn off fast cash and cash flow in different markets and different industries as quick as some of us know how to do. So your circ*mstances matter a lot. I mean, and then I'm going to go more personal. Are you really going to pull your kids out of school at a certain age? Are you really like going to be moving around? Your personal circ*mstances are critical as you walk through this recession.
Number two, the timing before a recession. Selling your home before the recession hit would have been advantageous. We are not in that seller market anymore. It has passed. So now it's shift in favor of the buyer, all except for the interest rates they're going to have to pay to move into your property. That's the downside for them, which is the bank rate. Now, market variability, right?
So click on that link below, grab a strategy session with one of our teammates. We'll walk you through just what some problems are, what some solutions can be, and then you decide if you want to move in closer and get some real help or hope and pray out there. I mean, some of you have have to be tired of this hope and pray methodology that you're living by and trying to figure it out alone when you don't have to. Figuring it out alone creates a lot of risk in and of itself. Potential for lower home values. So, again, during an economic turndown, it can be challenging because the lower home values are going to come in. So your houses aren't going to appraise necessarily, depending on the market, at the price you bought it at. So if you plan to purchase your next home with cash during a recession, again, you've got to do the analysis.
And then number five, you have to consider future market possibilities. We always move through a recession. Do you want to hold for now, wait till it comes back to more of a seller's market and hold then? And again, what are the variables and circ*mstances? We can walk you through an analysis, a risk analysis, a due diligence analysis. So grab a strategy session. And let's talk about that. I'm also going to give you a link to real estate as leverage https://shopintegratedwealthsystems.com/products/712414 It is my course that I wrote an eight hour course on how I became a real estate millionaire and gives you a lot of just detail around things around, you know, another way to hold a property is in your own LLC, and not own a personal property. And you can still homestead it if you have a housing agreement to live there. There are more sophisticated ideas for those of you that are higher net worth out there, but you have to lean in and have a conversation. If you have any questions, go to https://askloral.com./
I do little sequence mini makeovers out there. So if you're a member, you can raise your hand, talk to your strategist and say, Hey, I want to really talk to Loral one-on-one on a zoom call and ask me some questions and that's available as well. I can't wait to talk to you. Be part of your mentoring team. Be part of your advocate team because you are overpaying taxes in most cases, taking advantage of in many cases financially because you just don't know about money.
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