{"id":3848,"date":"2023-01-27T05:21:44","date_gmt":"2023-01-27T05:21:44","guid":{"rendered":"https:\/\/frankbuysphilly.com\/3-investing-mistakes-you-dont-want-to-make-in-2023\/"},"modified":"2023-01-27T05:21:44","modified_gmt":"2023-01-27T05:21:44","slug":"3-investing-mistakes-you-dont-want-to-make-in-2023","status":"publish","type":"post","link":"https:\/\/frankbuysphilly.com\/3-investing-mistakes-you-dont-want-to-make-in-2023\/","title":{"rendered":"3 Investing Mistakes You Don&#8217;t Want To Make In 2023"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\">\n<button class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<h2 class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/h2>\n<p><\/button><\/p>\n<\/section>\n<p><em>This article is presented by Kiavi. Read our\u00a0<a href=\"https:\/\/www.biggerpockets.com\/editorial-guidelines\" target=\"_blank\" rel=\"noreferrer noopener\">editorial guidelines<\/a>\u00a0for more information.<\/em><\/p>\n<p><span data-preserver-spaces=\"true\">From <a href=\"https:\/\/www.biggerpockets.com\/blog\/rising-interest-rates-challenge-investors\" target=\"_blank\" rel=\"noreferrer noopener\">skyrocketing interest rates<\/a> to <a href=\"https:\/\/www.biggerpockets.com\/blog\/these-housing-markets-are-cooling-the-fastest\" target=\"_blank\" rel=\"noreferrer noopener\">market pullbacks<\/a>, increased rental demand, and everything in between \u2014 2022 was a bumpy ride for real estate investors across the country. It was enough to make anyone\u2019s head spin.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">But it\u2019s a new year, and you\u2019re putting pen to paper and setting new goals for your real estate investing in 2023. While you may be focusing on\u00a0<\/span><em><span data-preserver-spaces=\"true\">what<\/span><\/em><span data-preserver-spaces=\"true\">\u00a0you\u2019re going to do to drive your real estate investment strategy into 2023 successfully, it\u2019s also a great time to take a hard look at what\u00a0<\/span><em><span data-preserver-spaces=\"true\">not<\/span><\/em><span data-preserver-spaces=\"true\">\u00a0to do.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Here are three things that every savvy real estate investor should consider adding to their\u00a0<\/span><strong><span data-preserver-spaces=\"true\">not-to-do<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0list.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">1. Don\u2019t Sit On The Sidelines<\/span><\/h2>\n<p><em><span data-preserver-spaces=\"true\">\u201cSome people want it to happen, some wish it would happen, others make it happen.\u201d\u00a0<\/span><\/em><span data-preserver-spaces=\"true\">\u2013 Michael Jordan, NBA Superstar<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">As we embark on 2023, interest rates will likely be higher than you\u2019d like for longer than you\u2019d like. Does that mean you should sit it out and wait to jump into your next deal? No \u2014 actually, quite the opposite. Some real estate investors are finding less competition than they have in several years! Shifting strategies and finding new markets is a great way to remain active as affordability continues to worsen.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Your moves may be emboldened by factors like homebuyers pushing pause on their purchasing plans because they\u2019re worried about how a possible recession could affect their job security. This factor, coupled with other market dynamics, such as high mortgage rates, could keep demand for rentals strong in 2023.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The best deal you can get is the deal you have in hand, given the math makes sense. We can sit here and play the \u201cwhat if\u201d game until we\u2019re blue in the face, but the simple fact is that none of us can predict the future. So, do the deal now if it still pencils \u2014 it\u2019s all about the math.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Focus on the trusted lender relationships you know can get the deal done. While you may potentially pay a little bit more with the rate, the certainty of execution and action is going to be your strongest form of currency in the current market.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">2. Don\u2019t Get Burned<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">\u201c<\/span><em><span data-preserver-spaces=\"true\">Education is when you read the fine print. Experience is what you get if you don\u2019t.<\/span><\/em><span data-preserver-spaces=\"true\">\u201d\u00a0\u2013 Pete Seeger, American folk singer and social activist<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">As a real estate investor, you most likely work with <a href=\"https:\/\/www.biggerpockets.com\/blog\/hard-money-loan\" target=\"_blank\" rel=\"noreferrer noopener\">hard money lenders<\/a> to finance some, if not all, your deals. Hard money loans are quick, flexible, and can be relatively easy to secure, but it\u2019s essential to do your due diligence and understand the fine print before jumping in.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Make sure to discuss any prepayment penalties that might be lurking in the fine print. If you find the penalties to be excessive, stay away. Instead, try to focus on flexible prepayment penalties. After all, the goal of a hard money loan is to provide short-term financing. As such, if you can, avoid any lending option with a severe prepayment penalty that could lock you into a high interest rate payment for an extended time.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Another thing to be on the lookout for is a forward rate lock or a guarantee that the lender will honor a specific interest rate at a specific cost for a set period. This strategy may insulate you from market fluctuations, which is essential, especially if you\u2019re financing or refinancing into a long-term agreement for a rental investment. If your current lender is quoting you a rate that floats during underwriting, run away \u2014 fast.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Why? Failing to lock your rate can be costly in a rising-rate environment. Imagine signing up at today\u2019s rate, and a few days before closing, you realize your rate has moved by 25-50 basis points! Your debt service could then be constrained to a lower loan-to-value (LTV), not looking at the same cash-out proceeds, not to mention the impacts this will have on your monthly cash flow.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Look for lenders that offer forward rate locks on their rental investment loans. This will allow you to maximize cash flow and grow your business in the current market.\u00a0<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">3. Don\u2019t Wait To Get Your House In Order<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">\u201c<\/span><em><span data-preserver-spaces=\"true\">Circumstances change, and you have to be proactive about changing with those circumstances.\u201d\u00a0<\/span><\/em><span data-preserver-spaces=\"true\">\u2013<\/span><em><span data-preserver-spaces=\"true\">\u00a0<\/span><\/em><span data-preserver-spaces=\"true\">Paul DePodesta, Chief Strategy Officer of the Cleveland Browns<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Pay off your revolving debt and get your <a href=\"https:\/\/www.fico.com\/en\" target=\"_blank\" rel=\"noreferrer noopener\">FICO\u00ae Score<\/a> as high as possible. The FICO\u00ae Score is one of the leading tools for measuring your creditworthiness and accessing the financing needed to maximize your ROI. Lenders require an efficient way to decide whether or not to qualify you for a loan and what interest rates to offer. In most cases, they will look at your FICO\u00ae Score before pre-qualifying your application and approving your loan. There\u2019s no better time than now to start the work to improve your score.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Having liquid funds available can be vital because of the flexibility it provides. Cash on hand can be invaluable in times of financial uncertainty \u2014 thus the phrase, \u201ccash is king.\u201d So, build your coffers for those opportunities that will present themselves. And trust me \u2014 they will present themselves.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Consider holding off on discretionary personal spending to raise liquidity levels and have cash sitting on the sidelines for when the right investment opportunities come along. Get your deals done now and take some cash out \u2014 that way, you can buy with cash if you need to in 2023. Since those deals will be at the deepest discounts, you can figure out a refinance to take the equity out and recapitalize it.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Fortunes can be made in real estate during a down market \u2014 look at some publicly traded real estate investment trusts as an example \u2014 and 2023 has all the signs for a decelerating housing market that may or may not be accompanied by a recession. Distressed sellers can emerge during times like these, creating an opportunity for real estate investors to buy low and generate cash flow to help ride out the storm.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Rental vacancies and home-buying demand went to one of their lowest points in history during the crash of 2008. Yet, some real estate investors were able to exponentially grow their wealth by planning ahead, and the years following were among the best times in history for real estate investing. Experts are predicting we\u2019re a long way off from a major housing correction like we saw from 2008 to 2012, but there will undoubtedly be opportunities out there this go around.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The bottom line? As you move into 2023, keep your eyes open for opportunities as they present themselves.<\/span><\/p>\n<div class=\"is-layout-flow wp-block-group border border-gray-200 p-6 rounded-md has-slate-50-background-color has-background\">\n<div class=\"wp-block-group__inner-container\">\n<h3 class=\"has-text-align-left mt-0\"><strong>This article is presented by Kiavi<\/strong><\/h3>\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/01\/kiavi.svg\" alt=\"kiavi logo\" class=\"wp-image-146504\" width=\"407\" height=\"80\" title=\"3 Investing Mistakes You Don't Want To Make In 2023 2\"\/><\/figure>\n<p class=\"has-medium-font-size\"><strong>Access Reliable Capital<\/strong><\/p>\n<p>Robust capital, flexible loan options, and quick closes allow you to confidently make offers &amp; compete with cash.<\/p>\n<p class=\"has-small-font-size\"><em>DISCLAIMER: The above is provided as a convenience and for informational purposes only; it does not constitute an endorsement or an approval by Kiavi of any of the products, services or opinions of the corporation or organization or individual. The information provided does not, and is not intended to, constitute legal, tax, or investment advice. Kiavi bears no responsibility for the accuracy, legality, or content of any external content sources.<\/em><\/p>\n<p><a href=\"https:\/\/www.kiavi.com\/biggerpockets?utm_source=biggerpockets&amp;utm_medium=content%20partner&amp;utm_campaign=BiggerPockets_PM_CP_Blog_Mix&amp;m_mdm=content%20partner&amp;m_src=biggerpockets&amp;m_cpn=BiggerPockets_PM_CP_Blog_Mix&amp;m_prd=direct&amp;m_fs=lead&amp;m_ct=html&amp;m_t=promo&amp;m_cta=Get%20Rate&amp;utm_content=202301_Blog_Mix_Sponsored-Blog_Mix_BPLP\" referrer:=\"\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\" rel=\"noopener\">Learn More About Kiavi<\/a><\/p>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-investing-mistakes-you-dont-want-to-make-in-2023\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article This article is presented by Kiavi. Read our\u00a0editorial guidelines\u00a0for more information. From skyrocketing interest rates to market pullbacks, increased rental demand, and everything in between \u2014 2022 was a bumpy ride for real estate investors across the country. It was enough to make anyone\u2019s head spin.\u00a0 But it\u2019s a new year, and [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":3849,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33,1],"tags":[],"_links":{"self":[{"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/posts\/3848"}],"collection":[{"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/comments?post=3848"}],"version-history":[{"count":0,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/posts\/3848\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/media\/3849"}],"wp:attachment":[{"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/media?parent=3848"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/categories?post=3848"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/frankbuysphilly.com\/wp-json\/wp\/v2\/tags?post=3848"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}