May 9, 2022
Matt and Garrett spend today’s episode talking about whether a primary residence should be called an investment. Their purpose is to make sure real estate agents are educating their clients well around the word “investment” in an effort to avoid the misuse of language and ultimately, disappointment. Once again, this comes down to accurate communication and the understanding that it’s imperative to have open conversations with buyers and sellers.
Our hosts maintain that real estate agents need to be careful when using the word “investment” to describe a primary residence, as that is rarely the case. Matt and Garrett suggest that appreciation of a primary residence should be a bonus, rather than being the reason to buy or sell. Whatever you are doing at the moment, whether you’re exercising, driving around, or just folding your laundry, you owe it to yourself to spend about 25 minutes with our hosts today to learn even more.
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Episode Highlights:
- Why using the term “investment” to describe
primary residences is problematic
- Buy based off of cash flow
- Be careful what you call an investment
- Dynamically change your relationship with your
clients
- Overdeliver on your value as a trusted advisor
Quotes:
“Everyone who is big in real estate investing will say [that] a real estate investment is something that actually pays you. If used as your primary residence, you are paying it. You are spending money every month on interest, on taxes, on maintenance, on all the things.”
“When agents are out there telling people about the investment and the appreciation, they’re not factoring the cost of carry, they’re not factoring in the cost of buying, they’re not factoring in the cost of selling… that’s where people get the most surprised like that six, seven% that now I have to pay out when I sell a house. That’s eating into this 10% appreciation that I just had.”
“Most [successful investors] do not buy based off of appreciation potential; they buy based off of cash flow.”
“If you go into your primary residence banking on it being an investment, you can get yourself burned really quickly on what should be a roof over your head.”
“If you want to bank on appreciation, too, then you have to plan on living in that house until your mortgage matures.”
“Appreciation is a bonus.”
“Now you’re their trusted advisor sitting down with them and explaining the market.”
“It’s just a nice way to keep expectations nice and low, and overdeliver on your value as a trusted advisor. Look at it from that standpoint, your clients will be even happier with you because everything is a bonus.”
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Garrett
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Matt
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