Let’s continue our talk about risk in real estate.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: We were talking about risk last program, and I don’t think we exhausted that conversation in the direction that we need to, to make you have the confidence, to help you have the confidence to move in real estate. What I think is risk averse, what minimizes risk, is your flexibility, your ability to move when you can, or when you want to more importantly, instead of when you have to.
Bob Nelson: Exactly. Because if you do put yourself in a position where you have to make a move, it most likely will not be a favorable situation. I mean, you’ve put yourself in a position, we have fewer and fewer choices. That’s not good.
Marcia Edwards: I just recently had, my daughter was buying a house and she was asking me about adjustable rate mortgages because she got a strong pitch from a lender in regards to three or five year adjustable rate mortgages. So they’re back. But that’s a great example of putting your back against the wall in regards to your timing.
Bob Nelson: Adjustable rate mortgages. What you’re agreeing to do, is you take on an adjustable rate loan, you are removing the risk that the lender has that interest rates on a loan made today will look extremely unfavorable at sometime in the future, and that’s the risk that the lender takes.
If they can convince you to take that risk away from them so that the interest rate on that loan adjusts to future situations, I can’t think of a situation, not even one, that that is positive. Unless they give you a low enough teaser rate trying to bait you into taking an adjustable right loan, that would allow you to make your decision to acquire, hold it for a fairly short period of time and go back out of it before the interest rate adjusts to an unfavorable level. That is the one single positive that I can think of.
Marcia Edwards: Well, this is just one example, very simple example of the risks that are there, without enough information. You’ve got to have the experts beside you so that you can hold onto the flexibility that’s available to you by negotiating smart. You want to know where the edges are, where the flexibility is, and when risk is actually unusually high, and you need someone who’s been through it before to have that conversation.
Bob Nelson: Exactly. And Marcia, you stand ready to assist individuals as they do residential properties. I stand ready to assist them as they go into income properties.
Marcia Edwards: Well, it’s a good year to do this, both of those, 2020. Let’s do it.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.