In this week’s show, we looked at what the Consumer Price Index (CPI) means for real estate, analyzed how different down payment amounts affect long term returns, and answered audience questions. For an in-depth analysis of down payment comparisons of 15% vs 20% vs 25% down, look for our deal analysis blog post.
The Consumer Price Index shows the weighted averages of consumer good and services. Looking at the chart, we can see that housing makes up the biggest chunk at 42%.
The CPI gets brought up a lot these days as we are starting to see an uptick in inflation. People worry what inflation will mean for real estate investing, but real estate is a good hedge against inflation. We have no data to show that the market is going to stop growing any time soon. With interest rates so low, there’s a healthy spread between cap rates and interest rates, which means it’s a good time to buy properties in growing markets and ride out the wave.
Our two audience questions this week were:
Should I quit my job and invest in real estate full time, and is now a good time to sell? When it comes to quitting your full time, W2 job, the short answer is usually no. Unless all of your spare time is spent on your side hustle and your full time job is actively taking preventing you from growing your business, you should stay in your job and focus on your long term goals. Also keep in mind that lenders look at your W2 when giving you lending terms, so going from full time employment to self-employment making no profit will make it harder to get a loan.
Should I sell my property now? When it comes to selling your property, keep in mind what your long term goals are. It’s a good time to sell and buy a better performing rental property, but it will depend on your specific situation and goals. This is where our Return on Equity spreadsheet comes in handy. Contact us and we can walk you through all of your options and help you decide on the best plan for you.