When is the Right Time to Refi? Let’s do the Math!

Caeli Ridge recorded this episode on 2/6/2024
 
When is the Right Time to Refi? Let’s do the Math!

In today's call Caeli discussed the things you should be looking at when you are deciding whether or not to refinance your property. She outlines the checklist that she would recommend you doing before making your decision, to cover all of your bases and make sure that the math is adding up to be the shortest amount of time to recapture your costs in the process.

Check out the video with the screen share and the documentation in the Community and our YouTube Channel.
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https://community.ridgelendinggroup.com/events/live-with-caeli

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855-747-4343 or email us at info@RidgeLendingGroup.com

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Transcript

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Karlie Smith: Hello! Welcome everyone to calling all real estate investors. We are live today with Caeli Ridge from Ridge lending group.

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Karlie Smith: You can always reach us at Info, at Ridgelending group.com, or you can call us at 855-747-4343. That's 855 74 Ridge.

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Karlie Smith: So during today's live call, if you have any questions throughout, please just drop those into the chat, and as they come up we will answer them as soon as possible. So today's call is going to be discussing. When is the right time to refinance? Let's do the math together.

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Karlie Smith: So if you're new to ridge lending group, then you may not know that do. The math has become chile's catchphrase, as she believes in the importance of it. So today she will be diving into that topic and showing you the ropes on how to do the math on your investments to help you make the right decisions throughout your investment journey. So, handing it on over to you, Caeli.

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CAELI RIDGE: thank you, my dear. Thank you, Karlie. Hey, gang, we have a nice intimate number here, a small group. I like that. So if you guys have questions like Karlie said, please make sure to put them in the chat. Just raise your hand, and we'll just have. You know, an open conversation before we get started today. It's very important that my housekeeping for this week. Is this

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CAELI RIDGE: boom? Everybody see that?

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CAELI RIDGE: Are we on the same page here? Everybody know what I'm putting down. Do you see that my 49 ers the Sunday for you football fans, or even if you're not a football fan, you know that that

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CAELI RIDGE: the super bowl is this coming? Sunday? 40 nineers versus the chiefs, and for any of you that are on my side, 49, or fans, or if you don't really have a team, then just come over to my side, and I'll make you a forty-niner fan. Let's f and go and then for you chief fans that might be watching after this. Dare I say? Suck it? I don't know.

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CAELI RIDGE: That might be too much. Anyway. Go nineers for anyone, and this is for you, Jlag, let's go, dude. We got this one

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CAELI RIDGE: view. If you're watching this after. Thank you for being here taking the time. We are. Gonna talk about refinancing. And when is it most appropriate to do so? There's a couple of different things that we're gonna cover today and then open up for QA. Alright. So first of all, when we talk about refinance, the first thing that you need to identify obviously is, why are we refinancing? Are we refinancing to pull cash out, do we? Wanna harvest equity?

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CAELI RIDGE: Are we refinancing to change or improve the current terms of the loan that we have existing? Or maybe it's a combination of the 2. But once you've identified the why of the refinance, then the following list or bullet points is what you need to have answers to before you can decide. Yes, it's a good idea to refinance or no, this may not be opportune. You want, and I have my notes here, so I'll be looking down as we're talking here.

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CAELI RIDGE: you want to know what your current rate is. Obviously. So if you guys had a checklist current interest rate. What is the current balance outstanding balance on this mortgage that you have? Maybe it's a free and clear property, and that would be kind of another conversation. What do you think the estimated value is? And where did that number come from?

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CAELI RIDGE: How did you ascertain that baseline estimated value? Was it from an appraisal that's 2 years old. If that's the case. Okay, do you have any idea in that particular market? Has the

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CAELI RIDGE: housing price gone up? Has it gone down? Does it stay the same? Did you look at Zillow? Did you look at Redfin? Do you have a real estate agent or property manager that's able to give you some comps. I would say that if you're guessing, and you really don't have a strong handle on what the value is. Such an important part of determining whether refinance is viable at all. I would encourage you to gather as much data as you can from all of those sources.

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CAELI RIDGE: All of the online stuff, the zillows and etc., those online places that you can find approximate values. I would tell you a couple of years ago. That would be the last place I would have looked to baseline of value. But over the years they've done a good job of getting more on the mark. So I think it's it's relative. But the more information you can gather, the better prepared you're gonna be to get a reasonable

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CAELI RIDGE: estimated value. The appraisal is going to be the end. All be all. But you want to try and get as close as you can without falling short. If you come in higher, even better right. The the point is is that you don't want to say that you think the value is 200,000, based on

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CAELI RIDGE: an appraisal that's years old, and it comes in at 1 50 or something along those lines. Right? You really wanna be clear on that? Because if you get too far into the process, you probably chewed up your time. Your efforts appraisal costs different things like that, and you may be left without a way to move forward if the value comes in much lower than what was anticipated. So do your homework there.

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CAELI RIDGE: next is prepayment penalties, and this is, I want to spend quite a bit of time talking about prepayment penalties, and how that plays into a refinance, yes or no. And then, when to really decide whether you want a prepayment penalty and how long you want the prepayment penalty to be. Because you guys have choices there when we start talking about prepayment penalties. So

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CAELI RIDGE: what's the rate? What do you owe? What's the balance due? What do we think the value is? Is there a prepayment penalty? And if the answer to that question is, yes. Do you know how to calculate it? Did you get that information when you closed your loan? Did you look at your loan, Docs, did you ask your loan officer and say, what is the prepayment? Penalty? Calculation? A lot of times.

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CAELI RIDGE: It's usually one of a couple of things. Let's say it's a 3 year prepay, and it's equivalent to a 3, 2, one, okay, 3, 2, one means that in year one of the 36 months. They're gonna take the outstanding principal balance times 3%. And that would be the pre payment penalty to get out of that loan, refine refinance, or if you sell it in year 2, it'll go 2%

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CAELI RIDGE: on a 3, 2, one tier, and in year one it'll go to 1% of the outstanding balance, and after 3 years there's no more pre pay penalty. Sometimes the calculation will be 80% of the outstanding principle balance times 6 months of the interest. Okay, that could be the prepay, or maybe it's a 3, 3, 3. So that if it's a 3 year prepayment penalty, it's 3%, 3%, 3%, no matter what happens. So make sure that you know what the the formula is for the prepayment penalty that was secured for your loan and

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CAELI RIDGE: subset of this is that when we're talking about mortgages that have prepayment penalties, those are going to be non Qm. Products. Fanny Freddy loans will never, ever, ever have a prepayment penalty. They're not allowed. But when you move into a non Qm. Product line prepayment penalties for investors are very, very common. But you do have that that choice you can choose to have a 3 year or 2 year, or one year serial, prepayment, penalty. Keep in mind that if you go for

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CAELI RIDGE: less than the standard 3 year, the interest rate's going to go up. Okay, just we'll spend a little bit more time on that and in a minute.

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CAELI RIDGE:  you know also with the penalty, once you have the calculation, did you add that into whether it makes sense within the refin numbers. Okay, I'm going to come back to that in just a second. We'll do an example. What are the current rents?

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CAELI RIDGE: When? How long is the lease? Do you have 6 months left on this lease? You have a year. Do you have 2 years? What are the rent increases?

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CAELI RIDGE: Do you guys have a feel for a rent appreciation? Is it 2%, 3%? 5%? Does your property manager? If you've got it professionally managed? Do they raise the rents every time they turn over a tenant? So does that mean that the average lease is 12 months, and every 12 months you're gonna expect an increase in in rents by 2 or whatever percent it is. Make sure that that information is in that checklist of things that you want to have ready while you're making decision to refi yes or no.

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CAELI RIDGE: And then finally, here, what are your plans for the property?

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CAELI RIDGE: Big picture stuff? Do you think that this is gonna be something that you're gonna hold onto for? You know, 5 years, 10 years or more. Do you think you're gonna 1031 exchange it? Is it gonna be held for legacy? And and and your kids, or your grandkids, or or other family members, or whatever is this something that you think that you're gonna turn and burn really quickly? Those are gonna be very, very important questions to ask about

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CAELI RIDGE: whether or not a refinance makes sense, and when you get into, let's say the answer is still, yes, I still want to refinance based on those variables.

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CAELI RIDGE: the math is going to be determined on how long you're going to have the prep. Well, how long you're going to have that loan?

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CAELI RIDGE: Okay, not so much about the property, the asking yourself, how long do you think you're going to have the property definitely plays a role? But, more importantly, how long do you think you're going to have this loan

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CAELI RIDGE: and that kind of leads me into the pandemic rates, most of us here, or that will be listening to this refinance or purchase property during the 2021 22 or interest rates you, we got amazingly low interest rates, so we we deal with this very often. People don't want to lose out on those 3 and 4% interest rates which I understand.

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CAELI RIDGE: But the the reality is, you guys, that the percentage of you that are going to keep those loans, those low interest rate loans for 360 payments until you pay them off

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CAELI RIDGE: is is extremely low. It's a fraction of a percent.

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CAELI RIDGE: So

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CAELI RIDGE: while talking about that, all of the variables that we just discussed are going to be crucial to knowing when refinancing will be appropriate.

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CAELI RIDGE: So those are the first list of questions that you wanna have answered. Okay. And I may actually come up with a a bullet point here, and we can send it out via the community. And you guys can have access to that. So that when you're looking at whether or not refinancing makes sense for any particular property. You can kind of start to have that checklist and gather those those details for yourself.

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CAELI RIDGE: Now, the next thing is is that we've identified. Let's start with cash out. Okay, so that's the list of things that we need to have answers for. And then now let's say that our our determining factor is is that for this particular property we want to cash out, we want to harvest that equity in full cash out.

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CAELI RIDGE: Okay?

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CAELI RIDGE: So the first question we want to ask ourselves is that once we've gotten the quote, chances are very, very good that the interest rate that you have now, versus what you're going to refinance into on a cash out refinance.

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CAELI RIDGE: Well, it's at least 50 50, anyway, that the new interest rate is going to be higher.

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CAELI RIDGE: Okay? And certainly the loan amount is also going to be higher if we're taking cash out than what it is today. So loan amounts going to be higher interest rates going to be higher. So what happens to our cash flow?

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CAELI RIDGE: It's going to be lower, right? It's going to go down. So making sure that we go back to those first questions, what are my rents to day?

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CAELI RIDGE: Does this activity, this refinance? Does it cover

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CAELI RIDGE: the new payment, higher rate, higher balance, higher principal balance does it cover as is if it does great. That's that's a win-win, because what's going to happen with the proceeds that we're going to get from the cash out. Which reminder everybody. Borrowed funds are what

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CAELI RIDGE: not. They're they're not taxable, right? Borrowed funds are non-taxable.

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CAELI RIDGE: The proceeds that we're gonna get we're gonna deploy for. Chances are almost certainly that you're gonna take those and you're gonna go put them to work for another investment. What is the rate of return or the cash flow from that other investment? So even if the increased interest rate and the increased loan amount

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CAELI RIDGE: puts you in a slightly negative from where you were before. Let's say you were cash flowing a hundred dollars a month prior to looking at refinance. You're gonna pull out 50 grand, 100 grand, whatever the number is. But as a result of the refinance, now you're gonna be negative by

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CAELI RIDGE: 5,000. 5,200. Whatever your numbers are, make sure that you're layering back in the return of the new investment or investments. Right? That seems obvious. But I can't tell you how many times, when I'm talking to people about refinancing.

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CAELI RIDGE: they haven't included that in their overall strategy. They haven't added that that piece into the math to say, Oh, yeah, I'm going to be getting $400 cash flow over here. I've got these 3 properties that I'm looking at. They haven't put that back into play in what they're losing in the cash flow here.

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CAELI RIDGE: And then we also have to remember. How are we appreciating our rents by how much and how often is that happening? So even if you're negative today, and you've lost 50 bucks or 100 bucks in cash flow from what you what you have right now. The cash out refinance is going to put you over that.

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CAELI RIDGE: When will you be back in the black? How long is it going to take?

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CAELI RIDGE: Is your lease coming up at the end of this year? And does that mean that you're going to get a rent increase of 2.

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CAELI RIDGE: That math is pretty simple. Right? Just figure out what your rents are. Now, add 2% or 3% or whatever it is, and then you can. You can go on from there and figure out how long? If you are going to be in a negative position? How long it's gonna take you?

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CAELI RIDGE: I won't spend a lot of time on this part, but there are some investors out there that want those negatives that they need those losses. Their incomes are so high that they want to have more of those deductions on their schedule. E. We'll dive into that in in terms of the interest and higher interest rates that a lot of the cash out refinances are gonna produce, because that's also a piece of the math is, what else am I gonna be able to use in that

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CAELI RIDGE: interest column of the schedule. E, the higher the interest deduction, obviously, the more it's going to impact what you're paying in taxes. I'll come back to that one in a second, too.

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CAELI RIDGE:  I got that

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CAELI RIDGE: right. So I think that was that. Was it for cash out. Does anybody have any questions about cash out refinance, and what you need to be looking for? We want to know what our returns are going to be? Do you have questions, Carly?

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Karlie Smith: No questions at the moment, but just for those who joined a little bit later, you can go ahead and ask your questions in the chat.

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Karlie Smith: or if you want to ask them verbally, you can raise your hand, and I can help to unmute you, and then you can ask those questions. So whichever works best for you guys.

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CAELI RIDGE: thanks for like, so just to recap on cash out, make sure that you're accounting for what your returns are gonna be as a result of grabbing at that cash.

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CAELI RIDGE: How long it's going to take to recapture

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CAELI RIDGE: using the return plus appreciation and rents. If you guys aren't appreciating your rents, maybe maybe I don't know if you guys want to just kind of wave the hand how many people appreciate their rents at least every 24 months.

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CAELI RIDGE: So I mean most people. It should be everybody on this call. If you're not appreciating your rents every 24 months.

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CAELI RIDGE: I may, and maybe there's circumstances. Okay, but I may suggest that it's it would be useful to to check with your property manager. And if if there's fear there.

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CAELI RIDGE: because they don't want to raise the rents because they don't want to lose the tenant. Now there are circumstances where that's valid. Okay? But more often than not I may question the efficacy of what they're doing, and I may push back a little bit and say.

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CAELI RIDGE: if if they're afraid to to lose the tenant for raising rents in a very reasonable way. Right? Well, market bearing maybe their property management

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CAELI RIDGE: vacancy and turnover isn't as strong as it could be

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CAELI RIDGE: right. A a real solid property manager should have no problems within market reason increasing those rents at that modest, and even if it's below a little bit on market, it should be happening so for anybody. That's not seeing that maybe we have an off book conversation. If you if you think there's value

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CAELI RIDGE:  cash out. Refi will almost certainly increase your payment and reduce your cash flow. What are you getting in return? And how long is it gonna take to make up and remember to include or layer in the tax advantage of doing so, not just in the increase in interest that you're gonna claim, but the closing cost. There are certain closing costs within a refinance for investment properties exclusively would not apply to a primary residence. But you get to deduct some of those expenses on a schedule. E. So all of those things need to be accounted for in a cash out refinance.

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CAELI RIDGE: Let me know if you have any questions about that. Let's move into a rate each term refinance. Okay?

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CAELI RIDGE: Rate and term is a little bit more complicated, I think, because it doesn't have that extra return. When we're looking at a rate term refinance. We're really just deciding, you know, when is it appropriate the cost of the refinance versus the potential savings. If that's what the refi is for when is appropriate to make that move? And how are you gonna try and predict the market for rate.

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CAELI RIDGE: Right? We are all kind of right on the edge there, where we believe that interest rates are gonna be coming down soon. Sidebar. The Feds are still sticking to their guns. They wanna continue they do. They were Jerome. Most recently, last week they met, and Jerome had reported that they do think that interest rate Fed Fund rates, cuts will happen this year.

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CAELI RIDGE: Wall Street kind of, I think.

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CAELI RIDGE: sometimes operate more on hope than in reality. And I kept hearing things like March being the first rate cut. That's not gonna happen. Jerome basically put a nail in that coffin. I think June is my prediction for the first rate cut. If I were to guess so, we'll see what my crystal ball says to us.

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CAELI RIDGE: So we're right there in the place. If you're not doing it already, you're kind of waiting to see what happens. When can I refinance for those of you that got to through. Well, you probably didn't get 2% on Melanie, or occupied but

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CAELI RIDGE: 3 and 4% for your investment properties. And you're thinking you're not going to touch those you have the heloc option, of course, but

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CAELI RIDGE: you're not going to be refinanced if you're not pulling cash out. Obviously you're not going to be refinancing those to improve upon the terms. If you are going to do a written term refinance, it is to improve the interest rate.

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CAELI RIDGE: Perhaps it's to get you out of an interest. Only you wanna get into a principal interest. I may argue with that. I'm not sure that I agree with taking an interest only, and putting it into a principal interest. If anybody is interested on why, that is, put it in the chat, I'll explain. I'm gonna move on from that, though. Maybe you've got a balloon. Maybe you've got an arm and you're afraid that the adjustments over time are gonna be harmful. Maybe you've gotta buy a

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CAELI RIDGE: a partner out that wants to get out of the property. You're both on the loan, and you gotta refinance to to get him or her off, or whatever it may be. But for the following commentary, let's just assume that you're taking an existing loan of a higher rate, and you're waiting to see how much lower the rates are going to be before you refinance, and it makes sense. The cost of the refinance versus the savings of the refinance.

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CAELI RIDGE: Going back to where we started with that checklist of things that you need to have answers for the primary one is going to be. How long do you think you're gonna have this mortgage? How long do you think you can have this property? I'd start with mortgage. How long you have this loan, and then I'd move on to how long you gonna have this property

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CAELI RIDGE: when doing the math and take out the tax advantage for a moment.

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CAELI RIDGE: you know I like to see a break even of about 60 months or less, the shorter the break, even the better meaning cost versus savings. So if the loan is gonna cost 5 grand, and there's a difference between a costing 5 grand, and you adding it into the balance. The loan balance versus coming from pocket. If you're coming from pocket on a rate and term refinance.

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CAELI RIDGE: my opinion would be, you better be saving a good chunk on a month by month basis to actually take your cash and put it toward that. If it's being rolled into the loan, if the value is there and the balance is there. The loan to value is enough so that you can just add the closing costs

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CAELI RIDGE: to the existing loan. No cash out of pocket.

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CAELI RIDGE: 5,000 for round numbers. Let's say the closing costs are $5,000, and let's say that the savings is $100. Right? There's 50 months, 4 point, whatever years that is. There's your break even

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CAELI RIDGE: now, because you're not coming from pocket. Yes, granted, you are going to be adding to your principal balance by that much, I understand, but it isn't realized from from actual cash on hand. And you have that write off. So, coming back to that piece, you've got the write off of the cost closing cost while the points, anyway. And you've got the the same interest deduction, because you're probably not doing it unless you're reducing the interest so

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CAELI RIDGE: that may go down a little bit. So make sure that that's part of the overall math that you're doing 60 months or less if you've got. But but let's say that one of your questions is, I'm not going to have this property past 36 months. I'm going to be selling it for whatever reason. And you do that that math.

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CAELI RIDGE: Okay. Now, here's where it gets a little bit more complicated. Let's say that you land on 4 years is the break even cost

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CAELI RIDGE: versus savings. But you're going to get rid of it

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CAELI RIDGE: in 36 months. You have plans to 1031 exchange, or whatever it is. Okay.

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CAELI RIDGE: But your math break. Even Math says it's gonna take you that 4 years what to do? Well, remember immediately, because, remember those costs that we're talking about are rolled into the loan.

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CAELI RIDGE: You're going to be getting that monthly savings of 100 bucks over 36 months. Okay, I'm probably going to say when we look at all of the pieces to the puzzle, I'm going to say that that refinance for that scenario makes sense for your

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CAELI RIDGE: your overall objective.

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CAELI RIDGE: Take the cash flow the extra 100 bucks a month, because that's going to be stockpiled for other reasons. Other investment reasons, of course.

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CAELI RIDGE: Let's see here.

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CAELI RIDGE: let's go back to

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CAELI RIDGE: actually one other comment. We talk about rate term refinance a lot of times, people will say, Well, I've already got 10 years into this built into this loan.

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CAELI RIDGE: All right. Maybe they the loan that they have they've had for 10 years, and they don't want to start that that clock ticking again for the 30 years. That's a fair comment.

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CAELI RIDGE: and I think it only applies if they really think that that particular mortgage is going to pay off in 30 years that they're not going to be doing anything else with it. And it also is going to come to play, too.

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CAELI RIDGE: What kind of savings? Right? So what if they've had it for for 10 years, if it can save them 200 bucks a month all day long. That's that's a

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CAELI RIDGE: a fair assessment, I would say. That's a good refinance on an investment property.

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CAELI RIDGE: All right, let's go back real quick and talk about prepayment penalties when to get any questions. Anybody have anything currently

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Karlie Smith: not available but pop those in the chat guys as they come up.

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CAELI RIDGE: Excuse me, let's talk about prepayment penalties. And when it makes sense to get a prep penalty, whether it be in a rising rate environment or a falling rate environment. Obviously, you guys have to determine a prepayment penalty. And and if it makes sense based on how long you're going to hold that property, or when you think you're going to refinance that property?

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CAELI RIDGE: So having those conversations is important, and the math is similar to everything else that we're doing, that that cost versus savings. If a one year prepayment penalty is appropriate, let's say you purchase a property in a market that's gonna appreciate beautifully. Okay, and the difference between

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CAELI RIDGE: a three-year prepay and a 0 year prepay no prepayment whatsoever is, it's going to take you from a nice positive to a decent negative.

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CAELI RIDGE: So then we kind of look in between. And we say, Okay, what does a one year prepare penalty? Do? Maybe we can live with a one year prepayment penalty because we still have a little bit of cash flow, but it leaves us that opportunity to refinance in a year's time and pull the cash out, because we know we're in an appreciating market. And that's gonna happen. We're gonna harvest that equity and continue to invest and buy more properties.

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CAELI RIDGE: So the keys. There are going to be figuring out that rate difference between a 0 1, 2, 3. In some cases we have some investors that we sell to that. Let us go a 5 year pre-payment penalty.

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CAELI RIDGE: So figuring out what the payment differences

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CAELI RIDGE: Aka rate, I guess, but more about the payment difference between those different layers of prepayment penalty and what the overall objective of the property is going to be.

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CAELI RIDGE: There was one other thing about prepay. I was gonna tell you guys, oh, yeah. And then calculate what the prepay is. Gonna be. So let's say, let's go back real quick and say that you chose 3 year. Okay?

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CAELI RIDGE: And the prepayment penalty on that particular product is a 80%

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CAELI RIDGE: of the outstanding principal balance times 6 months of interest. Okay. So if we can do that math

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CAELI RIDGE: and let's just assume that you know

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CAELI RIDGE: you're gonna refinance in about a year. Your objective is, you think you're gonna refinance in about a year, because you think there's gonna be enough equity, and maybe you bought it at a distressed price. It's already got some equity. And it's just not enough to make sense on the refinance. You're gonna hold it for 12 months because appreciation is at at 1215, whatever it is. Okay? So our objective is, we wanna refinance. This property in a year? A 0 prepay is is gonna be a real high interest rate. So we want to maybe do a one year. Or maybe we're going to calculate what the prepay is going to be. And we're just gonna pay the prepayment penalty.

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CAELI RIDGE: Okay, that math, once you kind of put all the pieces together should be very obvious. If the prepayment penalty, when all is said and done, if we take 80% of the outstanding principal balance times 6 months worth of interest. And that number ends up being

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CAELI RIDGE: 1,800 bucks.

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CAELI RIDGE: Okay? But the difference in interest rate with and without that is going to create cash, flow, loss or gain of $2,000. Right? The math will be obvious. Once you start putting the pieces together and connecting the dots. There shouldn't be a lot of question. And if you guys ever get hung up on something like that.

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CAELI RIDGE: just call me email me, and we'll go through the scenario. I should have probably had better examples for you, so that you guys could could do that. But I'll put that probably on the community page as well with that checklist for those that started late.

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CAELI RIDGE: Just real quickly. The first thing you wanna do when determining whether or not you want to. Refinance is, figure out. Why are we pulling cash out, or we replacing the existing loan with some new loan, for whatever reason, that is, what is your current interest rate? What is your current balance? What do you think the current value is? Make sure that you're quantifying where that number came from? Is it legitimate?

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CAELI RIDGE: is there a prepayment penalty? If there is a prepayment penalty? Will the loan to value

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CAELI RIDGE: allowance maximum

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CAELI RIDGE: support paying that prepayment penalty? And does it make sense within the big picture of what you're trying to do? Cash out versus refinance? What are the current rents. What's the length left on the lease of that current tenants?

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CAELI RIDGE: lease?

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CAELI RIDGE: How often do the rents increase, and by how much and what are your plans for this property. You're going to be harvesting equity over time. 1031 exchange you're going to hold on to it for

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CAELI RIDGE: for legacy and estate planning, etc.

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CAELI RIDGE: So I got that. I think that that covers most of the things that I would tell you guys about when it is appropriate to refinance overall that break even is the number. When when you get all of that data compiled, the break even is the key cost

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CAELI RIDGE: savings dividing those numbers will give you a number of months it'll take to get you there, and then you can answer the rest of the questions, and whether or not that is appropriate for you.

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CAELI RIDGE: One other thing I would say, if if for those that are kind of going to be on the sidelines waiting to see interest rates go down. Remember, this, interest rates go down slower, unfortunately, than they go up. So if we think that by June we're going to have a half a percentage point in in rate decrease. That's a big number in a couple of months. But let's just say that that's the case.

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CAELI RIDGE: What does that mean for you? What does the payment difference now? At

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CAELI RIDGE: 6 and a half versus in June.

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CAELI RIDGE: when I say 6 and a half percent at 6?

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CAELI RIDGE: Is it substantial

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CAELI RIDGE: or not?

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CAELI RIDGE: The other thing to keep in mind for anybody that's kind of waiting on the sidelines for interest rates to hit a certain number, and if you have a metric in mind that you need to keep the payment at a this is the payment that you need, and you can figure out what that interest rate needs to be. You can get pretty close. You can be watching the market. If you're paying attention, you can just email me and say, Hey, where do we think rates are? Gonna be in a month or 6 months, or whatever? I'll give you my best guess. But the one thing that you really need to account for is.

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CAELI RIDGE: where will the home value be? So don't just be looking at the rates exclusively. Okay, it's not gonna be? What if the values drop in in a way that precludes you from being able to take advantage of the new interest rate that could also be problematic now, that's probably not as likely. But I would still say that if you're not looking at both of the elements.

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CAELI RIDGE: the the value of the home today, if you're gonna try and forecast for an interest rate in a year or 6 months, or whatever it is fine. But you better be looking at the writing on the wall that says, this is where home appreciation or depreciation is expected to be in that market for those of you that have listened to me for any length of time. You know that I had checked the fhfa.gov website.

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CAELI RIDGE: maybe put that in your browser Federal housing, finance agency.

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CAELI RIDGE: This is the Us. Government. They obviously have very deep pockets.

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CAELI RIDGE: They spend a lot of time researching

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CAELI RIDGE: past, present, and future appreciation.

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CAELI RIDGE: Not every single small area markets gonna be in there, but the bigger markets nearby. Your particular where your particular property is located should be close enough. You can get on on on mark that way. There are data. It's called data tools. I think, within that website where you can go in, look for the city, the area.

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CAELI RIDGE: and then you'll be able to get the reports that say where appreciation has been the last 5 years, where it is today, and then they'll even forecast where the the expectation is going to be for the next 1224, 36 months, and that can help

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CAELI RIDGE: dictate whether waiting on a lower interest rate versus what you think the value of the property is going to be, because, remember, if the point is to improve the term or pull cash out, and you're waiting. The futuristic value of that property is equally as important as the interest rate.

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CAELI RIDGE: Right it should be. You should be looking at at both of those things.

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CAELI RIDGE: Okay, that's that's what I got for you on on refinances. And when the shorter

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CAELI RIDGE: amount of time to recapture cost versus savings is obviously the better number that you want to get. But that doesn't necessarily mean that you should or shouldn't refinance. There's all those other variables you have to take into account and consider

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CAELI RIDGE: before making any

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CAELI RIDGE: any decisions. When we got currently anything.

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Karlie Smith: Nothing at the moment but pop those questions in. If you guys have. I also put in the link to the community? If you are not a part of that already, you can please join us there, and, like Chile said, we're gonna have the checklist and some examples for you on there as well as other. You know, valuable educational tools.

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Karlie Smith: often are posted in there. So thank you guys so much.

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CAELI RIDGE: Okay, let's see, do we have anything? If if no one's got questions, if you guys have something come up or you've got a scenario. Just email, me, okay, if you've got a paid list. And this is the property here the numbers went. What interest rate do you think is gonna make most sense for me to refinance? If this is my goal pulling cash out, or this.

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CAELI RIDGE: if you give me the details, then I can give you my 1.3 cents worth. Take what you want, you leave the rest. What do we have, Curly for when's our next live?

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Karlie Smith: Our next slide is gonna be on the twentieth. So that is 2 weeks from today. And let me just look up here. What we are doing for

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Karlie Smith: that topic.

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Karlie Smith: The

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Karlie Smith: okay guys.

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Karlie Smith: we're going to be talking about remote real estate investing. So Taylor is going to go over pros cons and tips. You know, advantages and challenges for remote real estate investing and

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Karlie Smith: we have asked in the community. And you can feel free to also just email us, some tips of your own, some things that you've gone through. And you know Jaylee can touch on those, or you can bring those to the conversation on the day of whatever works best for you.

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CAELI RIDGE: And I think there's gonna be a lot of good content on that guys. The

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CAELI RIDGE: people struggle with sight on scene, and I think there's some really good, at least, in my experience, and what I've the things I've done right, and the things that I've done wrong.

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CAELI RIDGE: In

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CAELI RIDGE: finding properties that produce the returns that we expect with the least amount of brain damage possible. Right? That's that's a trick. It's not something that you just can wake up and say, Okay, I want to invest in this market because I hear there's good things about it. And here's my money and give me the property. You guys know that.

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CAELI RIDGE: So I think there'll be some good content there. The other thing that I'm kicking around. And then currently, maybe, we'll ask this question of community. But for those of you here feel free to to let us know once a month, I don't know what day. I don't know the third Wednesday of the month, or whatever it ends up being where. I will probably be live somewhere. So just if, for

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CAELI RIDGE: you know conversations about real estate, anything that has come up that you guys say, Hey, I had this deal, and it looked like this or this. This happened here. I had this tenant that did this or the laws in this state for this, whatever it may be. I'm probably going to have one day a month, where if anybody that wants to join I will be there, for you know

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CAELI RIDGE: at least 10 min. If people start coming in. Then I'll stay, and we'll have a conversation. We'll see how that goes. So if there's value there, let us know, guys. And then, you know for the bigger pockets. Carly, why don't you go ahead and tell everybody what that is? I don't think that I know that we're we're putting it out there on social media and stuff. But

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Karlie Smith: will you share with whomever's gonna listen later. And who we've got here today? What that is? Yeah, absolutely. So, guys, and as well as every Tuesday of the month, Chali is going to be doing a live QA. On the platform called bigger pockets. So this is a really great

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Karlie Smith: thing for investors to go on to learn lots of different things. But Kaylee's gonna be in one of the forums. Under real estate professionals, mortgage brokers and lenders.

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Karlie Smith: and she is going to be doing a live QA. So it's going to be over chat. And so you can pop your questions in there. Anything like she was saying that might come up during the week, or maybe something you weren't able to ask her in the live with Shailey calls like we're having. Now you can go over to bigger pockets. It's free to join.

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Karlie Smith: And like I said, it's one of the forums in

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Karlie Smith: real estate professionals under mortgage brokers and lenders. And then Shailey will be doing a Q&A there.

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CAELI RIDGE: Yeah, we'll put on the community, too, guys. We'll probably put instructions on how to find it. It's a little bit

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CAELI RIDGE: hard. I went in there myself, and I had to kind of dig around to to find where that specific

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CAELI RIDGE: place was for the live forum. So we'll put something out that might be easier for you to follow and get to. If you're interested I will be there every Tuesday. What time? Kerley?

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Karlie Smith: Yeah. So around 2 15 pm. Pacific time. To about 2 30, and, as in you know, engagement increases. Shailey will stay for longer, but for now you can either answer those questions and get them answered, live in the moment, or she'll answer them afterwards as she can.

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CAELI RIDGE: Anything real estate related guys, I mean, if I don't have the answer, I I'll get one, I promise you that.

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CAELI RIDGE: Okay.

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CAELI RIDGE: there's our 30 min. Thank you for being here. Appreciate you all very much. We're on. Stand by Ridgeline group.com info at Ridgelininggroupcom. My personal email, sea ridge@ridgelandgroup.com 8, 5, 5, 74 rich. See? You guys soon.