Tag: Interest Rates

  • Two Papers In One

    Two Papers In One

    A few years ago I decided to stop watching the news. Turned out to be one of the smartest things I’ve done in a while.

    I’m less worried, my mind seems to work better, I get more done, etc.

    I highly recommend it.

    And don’t worry about being “uninformed.” The way we’re constantly bombarded by media, you can’t really avoid it altogether. I’ve found that if something is big and important enough to actually matter, it will find its way to you.

    So all you really miss is the noise. Give it a try for a month and see how you feel.

    It’s easy to go back to the old way if you don’t like it.

    One exception is that I still look at the Dallas Morning News website a few times a week. I enjoy their sports coverage and also want to see if anything’s happening locally I need to know about.

    But if I’m not careful, I start reading headlines and get pulled down the rabbit hole of thinking the paper is nowhere near what it once was in terms of being a balanced source.

    It can be entertaining though. Pretty often you’ll see what I think of as the “two papers in one” effect.

    One day you’ll read about the “housing shortage” in DFW.

    The next, you’ll see headlines saying builders are slowing down because inventory’s piling up and nothing’s moving.

    So which is it?

    To be fair, it’s more complicated than that.

    DFW isn’t one market — it’s dozens of sub-markets layered on top of each other. Some areas are on fire. Others are cooling. And sometimes they trade places within a few months.

    In some areas, local regulations and land costs can make it nearly impossible to build housing at a price that fits the budget of a middle-class family. So there’s a “shortage.”

    In others, the relative affordability and better schools make it where houses almost can’t be built fast enough — at least until interest rates rise and put the brakes on it. So there’s a “slowdown.”

    In other words, market reality can be very different just a few miles away.

    That’s why broad headlines are almost useless when you’re trying to make a real decision. They can give you a general sense of the climate, but they can’t tell you what’s happening on your street, your corner, or your tract.

    If you own land, a lot, or a development site, your situation could be totally different than what the media portrays.

    That’s where talking with someone who works these deals every day actually helps — because “the market” isn’t one big story.

    It’s a bunch of small ones playing out at the same time. Written by increasingly young reporters who lack the context to really report on the market. Anyone old enough to have seen a Cowboys Super Bowl Championship can tell you today’s rates aren’t particularly high by historical standards. And that what passes for a slow market today would be a roaring success 15-20 years ago.

    Is it ever a bad time to talk to a real expert who shoots straight and knows the local dirt?


  • Does it Make Sense to Wait Forever?

    Does it Make Sense to Wait Forever?

    One of my long-time clients has spent years buying, selling, and developing small retail centers. You’ve seen the type—five or six tenants in a strip center, maybe a Domino’s, a nail salon, a tax office.

    I’ve sold him several sites for these projects, plus at least one that was already developed. From my side, the developed project was better—since my commission is a percentage of the sales price. So I always made sure to send him anything that looked promising.

    On one of the first deals I showed him, the rental income looked strong. Even better, every lease had automatic renewals with scheduled rent increases. I told him it looked good now, and even better in the future.

    That’s when he gave me advice that was so obvious, I didn’t see it until he said it:

    Those future numbers in the lease? They aren’t guaranteed. They’re the ceiling, not the floor.

    If a tenant isn’t doing well, when renewal comes around, they’ll ask for a cut. If things are going great, they’ll still ask for a cut. Your choices: reduce the rent or watch them leave. And then your “future income” goes to zero.

    That lesson carries over to where we are in land sales today.

    (Cue the standard disclaimer: I’m not a CPA or an attorney, I’m a real estate broker. None of this is financial or legal advice—it’s for informational and illustrative purposes only. If you have questions in those areas, talk to the right professional.)

    (Got it? Ok.)

    A lot of buyers are sitting on the sidelines, waiting for interest rates to drop further. Yes, there’s been some movement lately, but not as much as people hoped. More cuts may come later—or not.

    Here’s the key: real estate loans can usually be refinanced without penalty. Your interest rate won’t go higher than whatever your loan agreement says. But if rates go lower, you can refinance and take advantage of it.

    In other words, locking something in now gives you the upper limit on your loan cost. If rates fall, you can adjust later. If they don’t, at least you own the property and beat the folks still waiting.

    Is there risk? Of course. But sitting still has its own risks too.

    Is it ever a bad time to look at something from all the angles?

    When you’re ready, click below


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