Real Estate News – The Good, the Bad, and the Pretty

Real Estate

The Federal Reserve cut interest rates in September as most people expected. However, that doesn’t mean that mortgage rates will go down either since they are not inextricably linked. This was evident in 2003 when the Fed adjusted interest rates thirteen times over a six-month period, eight times down and five up, but without affecting mortgage rates.

Consumers don’t always understand this and are more likely to be suspicious of lenders if mortgage rates don’t fall after a Fed rate cut. Mortgage rates are affected by how investors feel about inflation over the long term. Mortgage rates will rise if investors think inflation is rising. reported that the average fixed rate for a 30-year mortgage was 6.82% in mid-July. The rate dropped to 6.32% in mid-September. These numbers mirror the Fed’s half-point reduction, but that’s just a coincidence. Interest rates are reacting to America’s natural market forces. The Fed’s rate cuts are a response to falling consumer interest rates in the economy. This is not what most people think.

The Fed rate won’t do much to stop home prices from falling in most parts of the country. Experts predict that home prices will continue falling, fewer homes will be built and existing home sales will remain slow for the foreseeable future.

Homeowners who bought their homes with very little down and took out adjustable-rate mortgages are the ones most in trouble during this slowdown. Their interest rates have been rising while their home’s value has fallen. This is a double whammy. This means that their monthly payments are significantly higher but they cannot refinance their homes to make them more manageable.

The real estate news isn’t all bad. First-time buyers are becoming more likely to purchase their first home because mortgage rates remain low and home prices are falling. This includes those who are currently renting but have been waiting for a correction in real estate prices. They believe the next months will be their best chance to finally get out of the rental cycle and move into their own homes, which they can afford.

Names are essential for any new business. Names should reflect your investment goals and industry. Avoid words that could have legal implications (ex. “Reality” is a good example. You should also check with your local Secretary to State whether the name is available. This is an important step because it is the name that you will use for everything, from opening your bank account to registering your company with your state. Tenants shouldn’t make payments payable to you.

If you are interested in even more business-related articles and information from us here at AC Studios, then we have a lot to choose from.

This leads me to my second recommendation. You will want to make sure your business expenses are separate from your personal ones now that you have registered your business name with the state. This is easiest if you open a separate business bank account from your personal account. Make sure that all income, expenses, and business-related expenses flow through this account. Do not mix your business and personal expenses. You could be subject to an IRS audit that could result in you losing some, if not all, of your legitimate business expenses.

One of my first steps in investing was to create a name and open a bank account. This gave me a professional look at all the customers and vendors I met, as well as a simple way to accept payments and track expenses.

Finally, it is a good idea to meet with an attorney (realty or trust & Estate) to help you choose the right legal entity for you. Because of the limitations on their personal liability in case of legal suits, many real estate investors choose to use a Limited Liability Company. You should consult your attorney to find the best option for you. However, you must ensure that you don’t own any investment properties in your name.

These simple strategies will help you set up your new real-estate business and make it a success.

We wish you success.

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