If you are wondering whether you should buy a house or a property in 2022, particularly since interest rates have been going up, we have some answers, tips, and ideas that will help you make a decision.
The first thing to consider is the reason for buying. If the property will be a resident and a permanent home, it’s a good idea.
The next question is, do you like the property?
Greg Davtyan, acquisition manager and investment specialist with Prospect Group an investment group that buy home fast for cash says, take time to think about it. Make sure the process is not rushed and the decisions are not emotional ones.
“Be sure you can afford the property and that you are qualified to make the payments,” says Davtyan. “If you can afford it, it doesn’t matter where the market goes.”
The real estate market is going to have its ups and downs but historically values have gone up over time.
For most people, the challenging part of purchasing a property is the downpayment. Davtyan says, with rents steadily increasing in Southern California, saving for a down payment to buy a property will pay off in the long run.
“Even if it means you need to do something extra on the side to give you the extra boost to be able to put at least put a little down so you can buy a place,” he says it’s worth it.
It’s a difficult sacrifice to make but the benefit of owning a property is knowing that there’s a fixed payment and nobody is at the mercy of a landlord increasing the rent due to inflation or supply and demand.
A property builds equity over time that can help an owner take out money and/or use it for other investment vehicles. Over time, even if the market dips, the value of homes historically has climbed back up.
Before making a purchase be sure to make an educated offer based on research and the guidance of a real professional, someone who is truly helping in the transaction and negotiation process.
To learn more about the topic watch the video or follow the conversation below:
Silva [00:00:00] Hello, everybody. Ooh, my hair looks kind of funky. I’m Silva. Welcome to Prospect Group. We like to have a lot of fun here. Thanks for coming back. We talk about real estate on this channel and everything about investing and selling and buying. This is where we help you make more money and we have a lot of fun in the process. Joining us today is Greg. He is one of our acquisition managers, an investment specialist. He’s an expert in this space. He’s been doing it for some time. This is a man who knows his numbers. Okay. So if you are wondering whether you should buy a house or a property in 2022, particularly since as of June of this month, which is when we’re taping interest rates being where they are, we have some tips for you and some ideas and he’s going to share them with us. But before we move on, I don’t know if I already said subscribe, if I did do it again, or send it to someone else to do it. Greg, is this a good time to buy real estate in 2022, considering the circumstances?
Greg [00:01:11] Well, I think there are a few things when it comes to that. I think you really have to think like, do I like it first of all?
Silva [00:01:19] Like what? The property?
Greg [00:01:21] Do I like the property? Do I really like the property? You know, think a little longer than like one night, two nights. You know, sometimes it’s like by, you know, buyers go in and it’s like, oh my God. And then, you know, the dust settles a few days. And so I just like, make sure you’re not rushing it. So make sure you like the house and then next thing, make sure you can afford it. I mean, ask yourself, what can I afford it? Am I qualified for it? And if you are, I mean, it doesn’t matter where the market is going tomorrow, I think you should buy it because this is my theory on it. I mean, the real estate market is going to have its downs, but it’s always going to keep going up. Whereas you for as far as what we know. Right, because it’s tied to inflation mostly, you know, I mean, interest rates going up. Rent is probably going to be going up and home prices are probably going to be going up eventually. No. Yeah, throughout time.
Silva [00:02:26] Throughout time, throughout. Just what you’re saying you’re talking about historically, we have seen an increase in home prices decade.
Greg [00:02:33] After decade.
Silva [00:02:33] Decade after decade, particularly in Southern California.
Greg [00:02:36] Yes. Yeah. Yeah. Let’s talk about California. Yeah, right. I’m in the Los Angeles market mostly. Right. So I’m gonna talk about L.A., California. I mean, throughout time, we’re going to see prices shoot up mostly, you know, most, almost most likely. Right. So I think, you know, when people are renting, they really have to think about like rent is going to keep going up. Right. Just like home prices. I mean, rents. Rent has gone up. Rent used to be like $800, then it went up to $1500. Now for a two-bedroom. Right. You’re paying about like.
Silva [00:03:10] $2700.
Greg [00:03:11] $2000, $3000 and sometimes, you know, 4000 depending on the area. So it’s going to keep going up. And I mean, if you’re renting, you’re going to constantly be paying more, most likely. But I mean, if you buy a house, you know, you’re going to be on a fixed payment, right? You’re going to be on a fixed payment and two, three, four, or five years later or, you know, down the road, hopefully, interest rates go down. You can refinance. Right. And then you can save even more money. Besides on, you know, the return on investment that you’re going to be making throughout time on that property.
Silva [00:03:47] There you go.
Greg [00:03:50] Should you buy a property? If you could afford it? If you really like the house. As long as you’re not paying crazy over and doing, you know, some ludicrous offer, to get it. I mean, I think you should buy it.
Silva [00:04:04] Do you think that this kind of reasoning and thought process is the reason why we have seen inflation, we’ve seen the interest rate hikes, we’ve seen talks of recession, but we haven’t really seen the price of homes dropping at the same rate as everything else has been moving? Because when it comes to really absorbing and processing, the reason we buy homes has never changed. Right. Because when you compare the payment amount of a house versus the rent that you’re going to pay, particularly in Southern California, in the Los Angeles area, sometimes the payment is lower than the rent you’re going to pay.
Greg [00:04:52] Yeah, sometimes. But, you know, and in that sense, it’s not going to be. You know, it’s not going to go down, you know, in correlation to how much things have gone up. You know, as inflation keeps going up, you might see we might see some adjustment in prices because of inventory shortage. And then it could bounce back up.
Silva [00:05:15] Right.
Greg [00:05:16] So are we heading towards a decline? Possibly. That’s where all indications are pointing to based on the economy and based on of where the market’s been in the past few years, as we know, in a frenzy. But a lot of it depends on the inventory level. So how much inventory are we going to see ending this year? And that’s going to dictate a lot on, you know, how much of a slump the market goes into, you know, in the time frame of it jumping back.
Silva [00:05:46] But, what you’re saying is that none of that all of those intricacies don’t really matter if you’re really buying a home that you’re going to live in. No interest rate. A percentage here, a percentage there, three quarters here. You know, the price of the house, $50,000 here, $100,000 is not going to make a difference for a long-term investment in a home that you are going to make your permanent home.
Greg [00:06:12] If you’re going to occupy a place, as long as again, you’re not offering something crazy, as long as, you know, you’re making an educated offer based on research, you know, and the guidance of a real professional, someone who is truly helping you. I don’t think you could go wrong because over time, even if the market dips, the value of homes is going to climb back up, and eventually it’s going to probably reach the value it was before and probably past it. So real estate, I think, is always a good investment, even if it’s just to occupy a place you’re building equity which you can take out later, and put into another investment vehicle. And I mean, if you’re renting, you’re just more likely going to be paying more and more money as time goes. So I think buying a place is important. It just, you know, the difference is getting that down payment. So for most people, you know, I always say you just have to find if your one career is not enough to get you to a point to buy a house, you need to do something extra on the side to give you that extra boost, to be, you know, to be able to put at least a little down so you can hopefully buy a place and, you know, have that fixed payment refinance later, maybe, you know, get your payment lower and have more of a guaranteed payment. Yeah. That, you know, you have to pay, you know.
Silva [00:07:41] Thank you for that informative and important information. And you know, this particular segment and segments like this and multiple other ones I’ve had with a lender who talks about the importance and of buying and when to buy and how to be prepared to buy and how that actually impacts and is the path for financial freedom and how financial literacy actually allows you to make those determinations and decisions. This is the point of this channel. We offer a value Greg’s perspective from where he sits and being in the market, the Lender’s perspective, and when he sits and what he sees, the numbers, all of these people crunch numbers, look at finance all the time. We hope that you use all of this information to make decisions specifically for yourself. If you are someone who wants to buy a house and if you’re a realtor, you can use these arguments for people who are on the market and become your clients.
Greg [00:08:41] And I come from an accounting background, so I think it’s important for people to make sure, you know, they’re really on top of their taxes, especially people in business.
Silva [00:08:52] Oh, he’s going to talk about taxes. That’s another subject.
Greg [00:08:55] I don’t want to go into it. I don’t want to go too deep into it. That will be another subject.
Silva [00:08:59] We’re gonna do another segment on taxes. I got to wrap this one up, but we’re going to listen, I promise you, real estate and taxes, that’s the next one. All right. Thank you, Greg. And be sure to subscribe. I’m Silva, this is Prospect Group. See you next time.
