Happy 2024! As you set your resolutions and look to expand your portfolio, this is the perfect time to dive into the real estate market … even though interest rates are high. Real estate entrepreneur and investor Moshe Popack explains why, and answers your questions in this entrepreneurship, real estate, and professional growth episode.
On getting creative when it comes to financing a home in 2024:
“Instead of a traditional mortgage, I would think about going to a private lender. It is expensive, but that’s the environment we’re in right now. Because banks aren’t necessarily going to lend. What I’m hearing from the banks now, especially commercial lenders, is that they’re going to lend to the people who are current clients first. Even if you’re going to pay 11 or 12%, that seems high, but don’t get scared of that. Because if you’re paying 30, 40, 50 cents on what it was on the dollar, okay, so you’ll buy the property, and you’ll pay the high interest, but because you’ve been able to buy it for so cheap in the end your net cost might only be 70 cents on the dollar.”
On the roadblocks when you start investing in real estate:
“My first deal I went to many people, and they all said ‘no.’ In the beginning, get comfortable hearing the word ‘no.’ Unfortunately, I had an experience where some of the people who said ‘no’, went behind my back and tried to steal the deal from me. So, you can have some of that, you can get lots of rejection, but you must not get discouraged about rejection. And then, just start. Even if you don’t get the best deal structure and you only get a small piece; that experience going through buying, managing, and fixing up that property … that experience gets you in the game. You have to be in the game.”
On what to look for when buying a home:
“I think, the first thing, look at crime stats. I know for me, that’s the first thing I do. I want to feel safe. I want to know that the local police are doing their job and I’d actually overpay to feel safe. Especially nowadays with how crazy things are.”
On the risks of buying rental properties:
“You have your expenses. Insurance is going up and taxes are going up. And you have your monthly expenses like utilities. The risks in buying rental properties are am I going to be able to find a tenant that’s going to be able to pay the rent and cover my expenses first. But even if I find a tenant, then maybe they lose their job and maybe they say, ‘Go ahead and evict me.’ … We deal with that all the time. Fix, six, eight months they can be sitting in the property. During COVID, the eviction process slowed down tremendously. People were in the units, and we had to cover that for almost a year. And the taxes are due, and the insurance is due, and you just have to pay it. And you have to have a buffer. You have to have reserves.
On taking the plunge and starting your business:
“Being in business is not easy. It’s not for the faint of heart. But I do recommend it. But you must have clarity on the things that you’re passionate about. If you’re passionate about it, it’s not going to be as big of a headache internally.”