Ready to unlock the mysteries of high interest rates in the real estate market? Together with investment guru Britton Begley, we'll show you how these rates can impact your estate planning and investments. Buckle up as we dismantle the fear-based approach to investing, and discuss why, when rates surge, it can be smarter to go against the flow. We'll reveal how high interest rates can actually cause a dip in housing prices and how you can seize this opportunity. It's time to understand why the housing market value appreciates - it's not competition, but the devaluation of the dollar.
Switching gears, we'll venture into the intricate world of asset protection and estate planning. Listen closely as we examine the implications of increasing interest rates on your real property investments. Discover how a meticulously crafted, customized approach to estate planning can be your shield in these volatile times. We'll arm you with expert advice on the pros and cons of the market, potential pitfalls to avoid, and how to effectively use estate planning tools. If you're a real estate owner or investor eyeing the market, this episode is your roadmap to navigating the ever-changing economic landscape. Don't miss your chance to fortify your assets - tune in now!
Hi, I'm Greg McIntyre with the Elder Law Report and bringing you a current event today High Interest Rates. You might say. What do high interest rates have to do with the state planning? Well, I deal with a ton of clients, and so does my law partner, britton Begley, and our attorneys that have real estate, and they're all talking about the interest rates in the economy, and it struck me that the way my investor clients think is different from the way a lot of my other clients, or the general public thinks about high interest rates. Look at what happens, britton. What happens in times when the interest rates go high, like right now.Speaker 2:
Yeah, it scares people, you know. I mean inflation goes up, you know interest rates will correspond to try to balance that out, and it scares people to invest in things that might require some type of loan, borrowing money. So it creates a bit of a crunch on the economy with those folks that are scared to put their you know money or to, you know, to get some type of loan for a property, something like that, because of the interest rate that they're scared of. And a lot of times, you know, folks are looking to put their money into a more of a conservative investment, like a CD, where they can get an interest rate because the interest rates are higher, but maybe an interest rate that's not going to you know return something that it could return if they looked at another investment. So it's all about really, you know, kind of a fear-based approach of investing and reacting to the rise in interest rates.Speaker 1:
I agree I mean, I talk all the time that human beings and this is a fact, it's just a proven fact human beings are primarily motivated by fear. So when they see interest rates go high, they're going to kind of try to move all their money or save, or pull out of the markets or not buy real estate. And that is really a classic example of where what the popular, I guess, thing to do or reaction is is actually the opposite of what the smart thing to do is. Now, I think it is a good and smart thing to take advantage of high interest rates, but there's multiple ways to do that, and that's what I wanted to talk about today. Moving money in CDs where there are higher interest rates, that is a positive thing. However, if you are not buying a home or buying an investment property, if you like real estate or you just want to buy a home and you're scared to do that because of high interest rates, I think that is again the opposite of the truth. And here's why when there's high interest rates, brent, what happens to the housing market? What happens to the prices of the houses or the properties out there? Yeah, they appreciate it, they go lower, right? Yeah, so when prices are high, it drives down the market. It drives down, it depresses, pricing, the price of houses. You have high interest rates. That's what happened in 2008. Everybody had these arm mortgages. Their interest rates started going up Variable interest rates. Variable interest rates more than they could actually afford. And when that happened, people lost their homes because their home values actually went lower right, because there was fewer interest in the housing markets. So what you can do, I call it the best of both worlds. So the best of both worlds is the saying that I love and hate. Have your cake and eat it too. That's the point of having cake. If you can't eat it, that's the whole point of cake. Everybody loves cake, so you want to have your cake and be able to eat it too. And here's how you do that. If you buy while housing prices are low, even if you have a few points higher on your interest rate, then you know if you've ever, if you've lived on the planet 20 years or more, you've seen interest rates fluctuate over time. They always will do that. Any market will fluctuate and go up and down. So the prices go low when the interest rates go high, and then the opposite happens when interest rates go low, everybody can get a loan and buy a house. So how? Everybody? There's a ton of competition in the market and prices go high. It's just a supply and demand, simple rule of economics. So in the situation we're in right now, it's a perfect, perfect time for a smart person who wants to buy a home to go buy their home. Then, in a couple of years, when interest rates get dip back super low, you refinance that and then you have your cake and you've eaten it to. You have the best of both worlds. That song's going through my head. The best Of both worlds, right? You know that is so true.Speaker 2:
What's that? That's the Hannah Montana theme song in Montana, baby you ever.Speaker 1:
You know she was happy. She had the best of both worlds. So so you want to be Hannah Montana in this market.Speaker 2:
Yeah, you know you don't want it. You want to buy the house low, you want to provide some Education on, you know, kind of what I was saying too is that we're actually in a period right now when it's even scarier for people because housing prices are continuing to appreciate because of the level of inflation that is happening. And until that level of inflation, you know, levels out, you know you're gonna have an appreciation of the value, not because of the competition in the market, just because of the cost of goods In general, the cost of real estate in general. Now the rise in the interest rate is to offset that. You know that. That inflation, that is, that's correct. So really, what's what? What you're looking at and to speak to what you're saying is, right now we're seeing an appreciation of the value of the housing market, but not because the competition in the market, not because of its intrinsic value, just because of the Devaluation of the dollar itself. But that's going to at some point, you know, cap out. It's gonna reach a certain you know threshold where it's no longer just going up. It's gonna go, you know, to sideways.Speaker 1:
So point, you can buy and then take advantage of that appreciation with inflation Right, the interest rates are gonna balance out that inflation and then, when they dip back low, you refinance and you have Bought at this level, appreciated at this level, have an interest rate that's super low on your loan and you're gonna have a lot of equity in your home and a low house pay. And the same thing I'm saying is true of a real estate investor who invested. Invest in residential rentals or Commercial rentals, right same as true. So, and especially in the commercial market, it's depressed right now, so it's the perfect time to invest right and in the residential is gonna follow that too.Speaker 2:
That's the point is that people just see that it's going up the value of houses going up that's because of, you know, inflation and you know at some point that's gonna level out. But you know it appears that the property is gonna keep that appreciated value. You know intrinsically at a certain point. And then you know if you're, if there is more competition in the market Once the interest rates go down, you know you can. You can buy it a lower you know price threshold, that sort of thing. But if you refinance in the future, certainly you can get a better interest rate than you can now. Once the you know interest rate hike is, you know the ceases because of leveling out inflation. That's kind of how it works.Speaker 1:
So let's get to what we do. So you know I work with a lot of Clients who have property and or they have a house, or maybe they're investors all of the above you do too. So we help people protect their real estate and protect their assets. So in helping to protect those assets, we use certain tools. D planning is a great tool. I. A simple way that you can protect your house is a ladybird deed and enhance life estate deed and it allows you to keep control of your home for the rest of your life, automatically pass it to your children and then avoid the high cost of long-term care, at least where your house is concerned, by not having the house be sacrificed if you have to access a benefit to offset the cost of long-term care. So a ladybird deed, great tool to protect your house, britton, we use trust many times to protect real estate. I've talked a lot about using even revocable living trust to avoid probate, avoid taxation, having companies that own real estate inside those trusts. We use irrevocable trust like specialized trust, medicaid, asset protection trust to protect real estate as well as. Maybe it's just for you as simple as a last will in testament directing who owns your property. When you pass Britton. What would you say about the tools we use and the urgency to get in and protect real estate and important assets?Speaker 2:
Yeah, you know, as far as tools we use, one of the principal purposes in putting those tools in place is to protect, you know, hard-earned money and property the main assets that you've worked hard for from the main risks that you can face if you age, which are, you know, cost of long-term care, taxation, undue taxation, and, you know, probate, and that's a really big deal when your loved ones are maybe looking to inherit property for trying to leave something behind, or even during your life, when you know you're in a state of vulnerability and you need care. So, you know, none of us have a crystal ball. We don't know what's going to happen. So it's good to put those things in place beforehand. So certainly there is an urgency to, you know, put the tools in place to protect these things. And we were talking about real property. Real property, you know, like we said, the value is going up. Less people are going to be buying real property because of the increase in the you know interest rate. A lot of people have locked in an interest rate. I mean it's important to protect these assets that you put a lot of money, a lot of time, a lot of effort in acquiring and there's no better way to do that with a comprehensive, customized approach in a state planning, like something like a trust or deed work to make sure these things go the way they should.Speaker 1:
And you don't have a crystal ball. I love that you said that, but what you do have is a guide, and I would love to be your guide. We would love to be your guide, and what I mean is we watch the markets, we see, we know what's going to happen. Markets are going to go up, then they're going to go down, then they're going to go up, then they're going to go down. The question is, what's the advantage of the upside and downsides of a market? And there are advantages of both. In addition, we see people all the time have claims attached to their hard-earned money and property, like long-term care, medicaid liens when they pass through a probate estate. We know that. So, from a crystal ball perspective, we can be your guide in helping you avoid those pitfalls and to take advantage of a state planning tools to protect your hard-earned money and property. Britton, thank you so much for discussing a hot topic right now that I think the majority of people have dead wrong and allowing us to talk about the upside of high interest rates and how we can help guide you in protecting your hard-earned money and property. Please don't wait till it's too late. Come back and tie your elder law.