Buy a Bigger House And Keep Payments the Same

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Alice's Analysis_ How To Buy A Bigger House AND Keep Your Low Monthly Payment

Oh, wow. Good afternoon Real estate fans, Alice Lema here, broker John L. Scott and beautiful Southern Oregon with another issue of our podcast. And this week, we're going to talk about the phenomena of buying a more expensive house than you have now for basically the same payment. So you can have almost the same payment and a much bigger property.

[00:00:27] You can have almost the same payment and a much more expensive home or much more expensive, investment. So this is a side effect of what I've been calling the artificial spike. And it's really not. I shouldn't call it artificial it's reactionary. We had a reactionary spike to the COVID. We had another reactionary spike to the fires.

[00:00:49] So now we have all this equity. Literally people have somewhere between in Southern Oregon, at least $30,000 more than they did 14 months ago, $30,000 to a$100,000 than they did 14 months ago. So what do you do with that? We do have a batch of people that are just out of here.

[00:01:08] They've just taken their money and they've gone. They've gone to Alabama, they've gone to Florida. They've gone to Wyoming. They've gone to Tennessee. They've gone to Nevada. They're just out of here. But there's a bunch of us. And some of us are investors. And so as homeowners and we're looking around and thinking, oh my gosh, if you go online or you talk to a lender, your payment could be almost the same as the house you have now, or the investment you have now. But you could have a much bigger property or much more expensive property.

[00:01:38] So this idea that you can shuffle your life around a little bit and make yourself more comfortable, make yourself set for the next 10 to 15 years, is really attractive. But you know, it does mean possibly considering selling the asset you have. Now, if you're going to sell the asset, you have, here's how you do it.

[00:01:57] You go and you look at what the property is worth. You talk to a lender, you get pre-qualified or you could pay cash. Some people have so much equity in these properties. They can just pay cash for the next purchase. But the point is you get a budget, so you figure out how much you're going to spend. And if you're getting a mortgage, then you look at the payments.

[00:02:15] And as long as they're in the same ballpark, I say it's a go. And it would also sell real quickly right now, because even though we do have more and more properties coming on the market. Every week now, the tsunami of listings is starting to come. You still have a good chance of getting your property in escrow and sold you know, too far into the summer before you get a lot more competition.

[00:02:37] But the competition is actually good on the buyer’s side because you have more choices. And I think as the market loosens up a little bit, this is what's giving people confidence to sell the property they have. And go ahead and lock in that next property. Bigger, better, more expensive, fancier, you know, more RV parking, more bedrooms, possibly an apartment for grandma or grandpa. That kind of thing.

[00:03:04] Now, the other possibility is you could just refinance out some of that equity. You could keep the house, keep it as a rental. You could keep the apartment building you bought, or the duplex. Just take a little bit of that profit and use that as a down payment for the next purchase.

[00:03:22] You do need to talk extensively with the lender, if you're getting a mortgage. Because they do vet you more stringently. They want to make sure that you can afford all this. And since the crash they do take it more seriously. You know, before the crash, they would let investors do a lot of things they don't, they don't do now.

[00:03:43] So, so keep that in mind, but the fun, the fun of being in the market right now is the interest rates are low. Yes, the prices are high, but because the interest rates are low, if you can scrape together a decent down payment, then you have an opportunity here, basically keeping almost the same monthly payment as you have right now.

[00:04:07] And you can get out from under the property you bought a few years ago, and maybe you bought it just as a stop, stop gap measure. Maybe you couldn't afford anything else. Maybe you've had children, maybe your children moved out. So there's a lot of different life events that can drive this. But you can basically sell a property right now, still fairly easily. Get something bigger and better, more expensive.

[00:04:32] And it basically has the same monthly payment and it doesn't get much more fun than that, right. Now, I do want to give one more example, and this is an investor who is in the process of doing something like this. Now they have a duplex. And they haven't had it very long, maybe five or six years. Well, it has gone up a hundred thousand dollars, so they can actually get a much bigger investment and they can do that through a 10 31 exchange.

[00:04:59] So it's deferred. Legal, legal deferred tax consequences, at least for now, we can still do that and they can buy a bigger property. And because our rents are so high and in my opinion are likely to be high for another five, seven, possibly 10 years in Southern Oregon and we do have economic foundational reasons.

[00:05:22] I have foundational reasons for saying that, but so basically they're going to have check this out the same payment. About they're gonna have a bigger property, so they're gonna have more rent just because they have more units and the rents are higher. So run your pencils. People sharpen them up, get a piece of paper, get your calculator, sit down and run some numbers.

[00:05:44] Cause this could be a once in a lifetime opportunity. The confluence, the confluence of opportunity is low interest rates. Two reactionary spikes in Southern Oregon. So our appreciation is somewhere between $30,000 and a hundred thousand dollars per property for a lot of us. And the opportunity as the market loosens up to have more properties to choose from.

[00:06:07] You can make that leap. You can do it now, get yourself set up for another five or 10 years. Like I keep saying it doesn't get much more fun than that. So, if you want to talk real estate, if you've got some ideas, if you have some problems, if you've got some situations and you need some, some counseling in the real estate aspect, give me a call, give me a text.

[00:06:25] I'm around all weekend, (541)301-7980. I work all three counties. I work all markets. This is my bag. This is what I do. And I always, always have an opinion. So give me a call, give me a text (541)301-7980 this is Alice Lema broker John L. Scott here in Southern Oregon. Have a fabulous Southern Oregon weekend.

[00:06:49] We'll talk to you again next week. Bye now.