Real Estate

How Do The Events of 1971 Affect Real Estate Today?

Something seismic happened in 1971 that drastically changed the economic climate, the effects of which you can still feel to date.

1946 saw the introduction of the post-war international monetary order, the Bretton Woods Agreement, which lasted till 1971. They decided that the US dollar would be a reserve currency that foreign governments could redeem for gold.

The US dollar was tied to gold, pegged at an exchange rate of $35 per ounce, the so-called Gold Standard. All the other international currencies were pegged to the dollar, which they hoped would be an effective hedge against competitive devaluation of currencies and boost global economic growth.

In 1971 however, the US government stopped the Gold Standard after learning it had insufficient gold to cover all the dollars in circulation. President Nixon temporarily decided to pause gold redemption, but the system collapsed entirely in 1973.

Since a lack of gold supply couldn’t stop them from printing more money, they couldn’t resist the temptation to print more money. That saw the US system change to a fiat currency system, which devalued the dollar.

As a result, more people decided to diversify their assets by investing in stocks, real estate, and bonds, which were relatively safer. That saw a rise in GDP and real estate prices, but wages remained the same, a trend that persists.

Real GDP, Real Wages, and Trade Policies

Studies show that home prices correlate with GDP per capita by 95%. In the long run, their growth trends correspond. After 1971, the real GDP rose due to increased productivity, but there was no change in the worker’s wages, and there was a rise in the real estate price.

Government tax policies can also boost or impede demand for real estate. Real GDP growth affects real estate as it is the primary driver of fees and rates. Real estate, finance, and insurance investments contribute directly to GDP growth by 21%. Since 1971 the GDP trend has been high, leading to increased real estate investment.

Home values change vs. Income change

The house value change has risen compared to income change since 1971. From 1971, productivity increased, the inflation rate increased, and home prices increased due to inflation, but wages stagnated.

Government tax policies can also boost or impede demand for real estate. Real GDP growth affects real estate as it is the primary driver of fees and rates. Real estate, finance, and insurance investments contribute directly to GDP growth by 21%. Since 1971 the GDP trend has been high, leading to increased real estate investment.

Home Values Change vs. Income Change

The house value change has risen compared to income change since 1971. From 1971, productivity increased, the inflation rate increased, and home prices increased due to inflation, but wages stagnated.


Interest Rates

When considering investing in real estate, one of the key factors to consider is interest rates. Demand is affected by a change in interest rates: demand increases when interest rates go lower and vice versa. You should note that a rise in interest rates leads to an increase in the cost to obtain a mortgage, lowering demand as before 1971.

Income Gains

Since 1971, the gap between the average American and the affluent seems to grow even wider. The income inequality and wealth since 1971 are due to massive asset appreciation. Wealthy individuals decided to invest in real estate due to its profitability, but the less affluent couldn’t keep up, further widening the inequality once appreciation kicked in.

The consumer price index vs. Real Estate Measures Inflation

Inflation leads to high mortgage rates due to increased interest rates by the Central Bank, which will lead to an increase in rental rates; increased inflation since 1971 has increased the consumer price index. This is good for real estate investors.

The graph below illustrates how house prices are compared to minimum wage. The minimum wage adjusted to inflation shows that it has declined over the past few decades. Less than 2% of the people in the workplace earn minimum wage.

Interest Rates

When considering investing in real estate, one of the key factors to consider is interest rates. Demand is affected by a change in interest rates: demand increases when interest rates go lower and vice versa. You should note that a rise in interest rates leads to an increase in the cost to obtain a mortgage, lowering demand as before 1971.

Income Gains

Since 1971, the gap between the average American and the affluent seems to grow even wider. The income inequality and wealth since 1971 are due to massive asset appreciation. Wealthy individuals decided to invest in real estate due to its profitability, but the less affluent couldn’t keep up, further widening the inequality once appreciation kicked in.

The Consumer Price Index vs. Real Estate Measures Inflation

Inflation leads to high mortgage rates due to increased interest rates by the Central Bank, which will lead to an increase in rental rates; increased inflation since 1971 has increased the consumer price index. This is good for real estate investors.

The graph below illustrates how house prices are compared to minimum wage. The minimum wage adjusted to inflation shows that it has declined over the past few decades. Less than 2% of the people in the workplace earn minimum wage.


Financial asset inflation is today’s most significant cause of inequality, hence monetary expansion. Because investors need an asset with an intrinsic store of value is essential, there was a decline in using fiat money and an uptake in financial assets investment such as stocks and real estate.

Many hold their wealth in financial support, which causes wealth stratification because most people cannot access financial assets. Due to higher productivity, the GDP rose, and real estate prices soared.

It thus meant an increased rate of hyperinflation. When inflation rises, some investment vehicles, such as real estate, appreciate, which is an advantage for real estate investors.

How Long it Takes to Save for a House

With the increased GDP and real estate prices, most people used their savings for real estate values due to their stable income. The personal savings rate fell, and people had to work more and longer to save for a house.

Most younger people are starting at a disadvantage. It is more expensive to get an education or assets that increase in value because of inflations, such as real estate or stocks. Many build their financial base by storing it in depreciation currency in the short term.

In 1971, for instance, a new house cost an average of $25,200 while the average annual income was $10,622. In 2022, the median house price is over $400,000, but the average income is slightly above $54,000 annually. Even if you were to use the current GDP per capita calculated by the World Bank, that figure is $69,287, well below the 1971 figures.

Income Growth vs. Income Inequality

Moving away from the gold standard incentivized the government to print more money, encouraging investors to find other ways to store their wealth. That increased asset price inflation since 1971 due to people holding their wealth in assets.

Investing in stocks, bonds, and real estate is the best financial tactic because the more assets you invest in, the better because, during inflation, you will gain.

This system affected the balance of economic equality since it made the rich wealthier and the poor poorer. The rich will gain during inflation due to their investments, while an average American will spend most of their dollars on rent, groceries, and insurance.

Since 1971 income inequality has increased significantly, meaning those who invested in stocks and real estate became richer.

Final Word

Because the US shifted from the Gold Standard in 1971, which allowed the government to pursue a fiat currency system that allowed them to print money at will. That created some instability, so most investors opted for more solid investment options such as stocks and real estate.

These promised more reliable paths for wealth growth because of asset appreciation. Even though wages stagnated, real estate investors can rely on real estate investments as a store of value because they hold intrinsic value and likely will appreciate.

By Gurpreet Singh Padda, MD, MBA

Real Estate

Property Tech: Massive Opportunity for Entrepreneurs

Just like many other sectors of the economy, technology is taking root in real estate. Using technology has become such a buzzword; it has earned the moniker proptech (property technology).

Although it’s in its infancy, experts envisage that proptech has a bright future. Future Market Insights predicts it will expand from its current value of $18.2 billion in 2022 to $86.5 billion by 2032. Here is why you should consider integrating proptech into your business. 

What is Property Tech?

Proptech refers to using technology in real estate. It aims to help customers and businesses optimize how they conduct real estate transactions such as buying, selling, researching, marketing, and managing real estate assets.

Benefits of Proptech to Entrepreneurs

Like other sectors, the real estate market would inevitably undergo a technological revolution. Here is a look at some benefits of prop-tech to entrepreneurs:

1. Increased productivity

Investors handled real estate transactions offline in the pre-digital era, which was inefficient and slow. However, because of advancements in property technology, all of this is accessible online, keeping all parties in the loop with greater ease.

Additionally, using data analytics technologies in proptech can help real estate professionals make better property-related decisions and streamlined portfolio management.

2. Improved communication

In the past, it was challenging for buyers and sellers to communicate during real estate transactions because they handled many deals offline.

Proptech can make all transaction data accessible online, streamlining communication between all parties. Property owners may also improve their communication with clients and give them timely, relevant information with the help of property technology solutions like chatbots.

3. Transparency

Traditionally, most real estate deals were closed in person, which made it difficult for buyers and sellers to find up-to-date information on transfers.

There are several ways in which proptech can increase transparency. For instance, it can provide information that enables consumers and corporations to make informed decisions regarding properties. It can also facilitate transparent and effective communication between buyers and sellers.

4. Improved marketing

Previously, you could only find property listings in print or via word of mouth, limiting its ability to reach a broader range of potential homebuyers and tenants. However, online real estate listings are accessible to a much wider audience because of technological advancement.

Moreover, you can use virtual reality, virtual staging, and other proptech tools to provide prospective buyers with a more in-depth look at a property without requiring a site visit.

5. Improved turnover and occupancy rates

Before proptech, property owners had to rely on a small pool of potential customers to sell or rent their units. However, with advancements in property technology, investors can now leverage online resources, such as online listings and social media, to attract potential clients. 

Landlords and property sellers can save time and effort by using proptech tools, such as smartphone apps, that make it easier for them to manage their properties and keep tabs on tenants, potential customers, and sale agreements.

How Proptech is Changing Real Estate

Here’s a look at some of the growing trends in Proptech:

1. 3D printing

3D is no longer constrained to printing small things in a studio; some 3D printers can create an entire house. Presently, 3D printing’s primary application in the property industry is in construction, explicitly printing building components like walls, work surfaces, floor tiles, and other functions.

However, it has become necessary in modular building, enabling more economically priced, environmentally friendly, and versatile building materials and prefabricated structures. 

2. Online listing

According to NAR, 43% of homebuyers search online for available properties. A real estate business is at a significant disadvantage if it doesn’t list its available properties online. Use pictures and videos to create an immersive experience for web visitors.

3. Internet of Things

According to a poll by Statista, 42% of respondents admitted they are optimistic about Smart Building technology, while 56% said they have already felt the effects of technological advancements.

The Internet of Things (IoT) describes a network of connected devices and systems that exchange data and instructions in real-time. You can even use the IoT to create smart homes with various connected devices you can manage remotely.

Besides automating property controls and taking care of routine maintenance, modern IoT systems may also identify faults and defects and optimize environmental performance by modifying operating systems depending on the actual or expected use. That leads to less energy usage, cheaper maintenance, and better air quality inside your property.

3. Blockchain

You’ve probably heard of blockchain when a conversation about Bitcoin and cryptocurrencies broke off. It refers to a distributed digital ledger technology that you can use to streamline real estate transactions, including renting and selling.

For instance, you can utilize the blockchain to make a distributed ledger of all your real estate deals, allowing streamlined monitoring of transferring property ownership. You can also use blockchain to create smart contracts. The blockchain can store and automate contracts when parties meet specific conditions.

4. Crowdfunding

Budding real estate investors that do not have deep pockets can take advantage of crowdsourcing. These are platforms where many investors can raise money to purchase a property.

Thereafter, professional property managers will take over the management and maintenance of the property, so the investors don’t have to worry about taking care of those responsibilities.

5. Big data and analytics

Big data describes extensive or complicated data sets that are too massive for conventional data software to process. A McKinsey research found that machine-learning models used in real estate applications are 90% accurate at predicting rent rate changes and 60% at predicting changes in other property variables.

That knowledge about market or customer behavior provided by big data can aid in pricing, identifying market trends, and weighing the risks and rewards of an investment. Analytics allow investors to build homes with the features the target occupants want, ensuring steady occupancy levels.

Final Word

Proptech is still a relatively new byword in real estate, but its benefits are evident in helping develop, sell, and manage properties. It helps to integrate it now to reap its benefits and ready your business for the future when it is more prevalent.

By Gurpreet Singh Padda, MD, MBA, MHP

Real Estate

What 2023 Promises for Home Prices in Your Local Housing Market

The annual inflation rate in the US was 7.7% for the 12 months ending in October 2022, and for the third week in a row, the 30-year fixed mortgage rate stayed above 7%. After several years of ups and downs, no one is quite sure what the local housing market has in store for 2023.

The housing market in the US is currently experiencing a significant slowdown. However, experts have different opinions and forecasts regarding the impact of the economy on home values in the US in the coming year.

Here is a look at predictions made by major financial institutions, research firms, and real estate investment companies on the 2023 home prices. 

Wells Fargo

According to their latest predictions, median prices for single-family homes throughout the country would fall by 5.5% between now and the end of 2023.

Their economists predict that the median price of an existing single-family home will rise to $385,000 this year, an increase of 7.8% from last year but much less than the 19% annual increase predicted in 2021.

The analysts also expect the median home price to drop to $364,000, a decrease of 5.5% from this year. They forecast a 3.3% increase in prices in 2024, bringing the median price to $366,000 by that year’s end.

Morgan Stanley

This major financial institution is the most recent member to join the growing group predicting a housing correction in the housing market.

Its analysts predict that 2023 will see a decrease in home values throughout the United States’ most expensive housing markets due to the impact of rising mortgage rates. Morgan Stanley forecasts housing prices in the US will drop by 7% by the end of next year.


Zillow issued a bold prediction during the hectic spring house-buying season, claiming that US home prices would increase by an additional 17.8% between February 2022 and February 2023 due to the Pandemic Housing Boom.

It, however, reported that property values fell in 117 local markets throughout the country between May and August. There were 36 markets where the drop was more than 3%. These marketplaces fall into two categories: expensive tech hubs like San Francisco or overheated boomtowns like Austin (7.4% decline) and Boise (5.3% decline). 

Although property values fell in 117 markets this summer, they increased in 779 others. These increases were especially noteworthy in East Coast cities like Miami (up 4.1%) and Myrtle Beach, South Carolina (up 4.5%).

Going by current trends, Zillow forecasts a 2023 housing price decline in some areas while gaining traction in others. Zillow revised its house value prediction downwards between August 2022 and August 2023 from 2.4% to 1.2%

According to Zillow’s researchers, recent home market indications show buyers are holding back while affordability barriers remain as high as they have been in recent memory, prompting the downward revisions.

Home prices in Boise and Phoenix, for example, fell sharply last summer, but Zillow predicts a slight recovery in those cities in 2023. Zillow forecasts an increase in Boise and Phoenix home values by 4.3% and 1.7% over the next 12 months.

Zillow also predicts that property values will decrease in 271 locations throughout the country between September 2022 and September 2023 while rising in 607 markets and remaining unchanged in 19 others.

Goldman Sachs

In August 2022, Goldman Sachs forecasted that the housing market would decline further in 2023, with home price growth coming to a complete halt, averaging 0%. They expect that by October, prices will slip down further.

According to an analysis posted on the investment bank’s website, their analysts, using their G-10 home value model, predicted that home prices in the United States will fall by 5% to 10% due to rising mortgage rates from their recent highs.

The economists warn that the housing market could fall even more than their model predicts because of the dire signals from home price trends and housing affordability.

Moody’s Analytics

As of August and again in September, Moody’s Analytics lowered its prediction for the US housing market. According to Fortune, Moody’s forecasts a peak-to-trough decline in US home prices between 5% and 10%, but the organization is also watching what it considers highly overvalued property regions, where it expects reductions of 10% to 15%.

This forecast has its basis on the assumption that the US will not enter a recession. Moody’s Analytics chief economist Mark Zandi estimates a 15%-20% drop from peak to trough in home prices in the event of a downturn.

Fannie Mae

According to Fannie Mae, several economic indicators indicate a possible recession in 2023. Doug Duncan, senior vice president and chief economist at Fannie Mae noted that the Fed’s efforts to combat inflation have the intended impact on the housing market.

Duncan anticipates the housing slump to persist through 2023 due to rising mortgage rates and property prices, making purchasing a home challenging for many people. However, Fannie Mae has given no negative annual forecast for home prices in 2023.


According to the S&P US home values tracking CoreLogic Case-Shiller Indices, prices nationwide soared by 13.5% in August 2022 compared to last year.

The index predicts home prices will remain unchanged month over month from August to September but will rise by 3.2% year over year from August 2022 through August 2023.

Final word – Will 2023 be a buyer or seller market?

Real estate has been a seller’s market for two years since the epidemic struck. However, recent economic changes seem to suggest the tide is shifting.

The rising cost of borrowing has significantly reduced the affordability of purchasing a property. The housing affordability index published by the National Association of Realtors shows that existing-home sales have declined for seven consecutive months through August.

Many economists, researchers, financial institutions, and investment firms predict that home prices across the US will drop by at least a few percentage points, possibly as much as between 5% to 15%, in 2023. Significant declines will likely occur in the more expensive markets.

Further, there is still limited inventory in the market, and considering the unfavorable market conditions, builders will likely scale down production. All this points to a market that will probably maintain equilibrium without tipping drastically toward one side or the other.

By Gurpreet Singh Padda, MD, MBA

doctor Real Estate

Making a move From Medicine to Real Estate Entrepreneurship

Practicing medicine is a noble profession, but a grueling career as you will spend years training and serving patients. You will barely have time for yourself as the practice dictates you have no definitive working hours.

Consequently, incidences of burnout are rampant in the industry, partly explaining why up to 47% of healthcare workers in the United States intend to quit their jobs by 2025. Presumably, to try their hand at less stressful ways of making money.

As a medical professional intending to venture into entrepreneurship, the real estate industry looks like a great prospect. The global professionally managed real estate market was worth $11.4 trillion in 2021. Keep reading to learn how to move from medicine to real estate. 

Why Medical Professionals Might Want to Shift to Entrepreneurship

Some of the reasons a nurse or a doctor might want to get into entrepreneurship are:

  1. Shift career: Exposure to diseases and viruses for long hours daily is not everyone’s cup of tea.
  2. Better work-life balance: Working in healthcare for most practitioners means giving up your social life, which isn’t ideal if you want to start a family.
  3. Filling a gap: There might be a medical issue you feel you can only solve by being an entrepreneur.
  4. Explore new challenges: Even if you have a rewarding career, it might have become too monotonous, so you want to try something new.

Reasons Why Caregivers Could Become Successful Real Estate Entrepreneurs

Here are some of the reasons medical professionals can become successful real estate entrepreneurs:

  • Desire to make a difference: Medics know all about changing people’s lives for the better, which isn’t far removed from the goals of most entrepreneurs.
  • Strong interpersonal skills: In the business world, having the skills to connect with people from various walks of life, develop relationships, and communicate effectively with them will put you ahead. As a medic, you already have these skills as you interact with patients and their families daily.
  • Pattern recognition: Medical schools teach medics to think critically. They can stand back and examine a situation by focusing on the essential aspects and patterns. This critical thinking ability will stand you in good stead to develop creative solutions to issues in the real estate industry.
  • Commitment to continuous learning and growth professionally: Doctors and nurses constantly look for ways to improve their skills and stay abreast of the latest medical advances. It would be best if you retained this curiosity and drive, as it will help you learn and grow your real estate business.

How to Move from Medicine and Venture in Real Estate

Real estate is still one of many millionaires’ most preferred investment options. The best way to go about it includes the following:

1. Know your market and pick a niche

The first step towards becoming a successful real estate entrepreneur is knowing what market you want to serve. How will you know you’ve arrived at your destination if you don’t know where you want to go?

The real estate industry is vast, so it helps narrow your scope and focus all your attention on that single niche. These are some of the real estate niches you could try out:

  • Residential real estate
  • Property management
  • Commercial real estate
  • Resort and vacation homes

2. Market research

It helps to know who you are selling to and what they need to provide the right services for your target audience. That entails extensive market research on demographics and current trends.

The research should provide some pointers on how you can position your business in the chosen niche. Try to find some real-world experience and self-assess your skills to work out if you have the skills needed to fill the gap in the market.

3. Create a plan

Once you know your target market and have researched their wants and needs, you should create a business plan to meet those needs. A business plan will formulate a roadmap of how you will start and run the business. An ideal business plan should contain a detailed outline of the industry overview, research and analysis, marketing strategy, management, and finances.

4. Start with what you have

One look at a real estate website may put you off real estate entrepreneurship if you don’t have vast sums of cash. That doesn’t mean you can’t start small. There are plenty of investment opportunities, even for those without deep pockets, such as REITs.

5. Network

Networking is another great way to gain experience and learn about the industry. Attend events, conferences, and seminars related to your field. Ask people for advice and feedback. Don’t be afraid to ask someone for a reference or recommendation.

You can also join a network marketing company. It is one of the best ways to become successful in real estate entrepreneurship if you come from another profession. Network marketing companies offer their members a low entry cost, high earning potential, and a strong sense of community.

6. Be patient

Successful entrepreneurs understand that patience is a virtue. You won’t become a millionaire overnight, so don’t expect to make money immediately. Take baby steps and keep at it diligently.

7. Stay organized

Keeping organized is vital. Keep track of everything you do, especially expenses and income. Use spreadsheets, calendars, and notes to organize your thoughts and ideas and manage the day-to-day running of the business.

7. Build Relationships

Relationships are the foundation of any successful business. You can develop trust and loyalty by establishing relationships with customers, vendors, and employees. A strong relationship network allows you to widen your market reach, potentially increasing your bottom line.

8. Set Goals

Finally, you need to set realistic goals for your business. Setting goals gives you something to strive for and motivates you to keep going even when times get rough.

Final Words

As a medical professional, you already possess qualities that can make you succeed in real estate, such as strong interpersonal skills and a willingness to help people. If you feel like making the jump to real estate, some things you could do to improve your chances of success include creating a business plan, conducting thorough market research, and networking with other real estate industry stakeholders.

By Gurpreet Singh Padda, MD, MB

Real Estate

Why You Should Be Thinking About Alternative Investments

All you see in the news nowadays are rising gas prices, inflation, and high interest rates. The stock market isn’t faring any better: Nasdaq 100 has shed more than 33% so far, while the much-vaunted cryptocurrency, Bitcoin, has dropped more than 60% of its value.

In uncertain times, financial advisors often encourage investors to turn to low-risk, fixed-income investment options, such as CDs, money market funds, and high-yield savings accounts. They reason that these safe investments will preserve your assets as they provide positive returns. But do they?

Investing in the stock market and receiving a 60% loss is a no-no, so the financial advisors would rather you invest on a 10-year treasury yield, making 3.7%. While it may seem the investment is making you money, you have to consider that the annual inflation rate rose to 8.2% in September 2022. That means you are losing money (-4.5% annually).

While all investment options seem pointless at the moment, one criminally underutilized segment is viable during market downturns. Did you know you can make as much as 12% returns using alternative investing?

According to Prequin’s 2022 Global Alternatives Report, the alternatives AUM concluded at $13 trillion in 2021 and is projected to expand to 11.7% ($23 trillion) by 2026. This is a look at what alternative investing is all about.

What Are Alternative Investments?

Alternative investments have no basis on traditional financial products like stocks, bonds, or cash. Most alternative investments don’t receive as much regulation from the SEC and could be more illiquid.

Types of Alternative Investments

As more and more alternatives become available to retail or individual investors, it pays for investors to have a solid understanding of these options. The following are some examples of alternative investments:

1. Private Equity

Private equity is a term that describes investments in businesses not traded on a public market like the New York Stock Exchange or NASDAQ.

The goal of private equity firms is to generate returns for their investors by making strategic investments in private companies with the assumption that the value of those investments will increase by a certain time. You can further break private equity down into these categories:

  • Venture capital
  • Buyouts
  • Growth equity

These asset classes typically require long-term investments of substantial capital, so only institutions and wealthy individuals can participate.

2. Hedge Funds

A hedge fund is a type of pooled investment partnership that trades liquid assets using various investment strategies to generate a high rate of return for its investors. Entrepreneurs can invest in a wider variety of securities, as hedge funds are not subject to the same regulations as mutual funds.

Compared to other alternative investments, hedge funds are notable for their high liquidity ratio. Because they have a higher concentration of liquid securities, you can liquidate the funds in minutes. Due to the high costs and risks involved, only wealthy individuals and institutional investors, like pension funds, typically invest in hedge funds.

3. Structured Products

Structured products are a type of investment that involves pairing a debt instrument (such as a bond or CDs) with one or more derivative instruments tied to an underlying asset class or a collection of assets such as stocks, market indices, currencies, or interest rates.

Despite their complexity and potential for loss, structured products allow investors to create a uniquely tailored portfolio to their needs. Typically, investment banks produce them and offer them to institutional, corporate, and individual clients.

4. Private Debt

Private debt consists of loans from sources other than traditional banks. Businesses often use private debt for expansion, working capital increases, or real estate construction and development. 

Given the historically low returns on government bonds, direct lending to businesses can provide a sizable premium over the cash flows accessible from liquid fixed-income products. Private debt funds, the firms that provide the funding, make money through two main channels: interest payments and the eventual repayment of the loan.

A private debt fund may also focus on senior, junior, or mezzanine debt, among other strategies, such as direct lending, venture debt, and exceptional situations.

5. Real Estate

Many Americans already have a stake in this asset class because they are homeowners, making real estate the most viable alternative investment. Real estate investments can take the form of direct property ownership or indirect investments.

Properties like apartment buildings and shopping centers provide regular rental income to their owners, and they hope for price increases over time.

Investors who want a more hands-off approach might buy shares of private real estate investment trusts (REITs) through a broker. REITs that trade publicly do so through the stock market.

In addition to its diversification benefits, real estate offers investors a hedge against inflation and favorable tax advantages.

6. Commodities

Commodities are tradable items that have both direct and indirect economic uses. Examples of commonly traded commodities include gold, farm animals, precious metals, wool, oil, gas, wood, and uranium.

Given their relative immunity to fluctuations in the public equity market, investors often use commodities as a hedge against inflation. Commodity prices fluctuate based on supply and demand market forces; increased demand will lead to higher prices and greater returns for investors. You can invest in commodities in several ways, including:

  • Futures Contract
  • Stock
  • Physical commodities

7. Collectibles

When you invest in collectibles, you aim to generate a return on your money through long-term appreciation of the items you own. Some of the common types of collectibles include:

  • Books
  • Rare wine
  • Stamps
  • Antiques
  • Trading coins
  • Art
  • Coins
  • Baseball cards
  • Toys

To succeed in this alternative investment strategy, you need an extensive understanding of the sector and the patience to hold on to your investment for a long time. It is not easy to predict how much a work of art, or a collection will increase in value because both can decline in worth or get destroyed. 

Some collectors treat their collections as investments on par with their homes or cars, and their collections make up a significant portion of their net worth. Adding collectibles to a portfolio is a great way to diversify your investment base and spread your risk.

Final Word

Many investors are increasingly looking to alternative investments to diversify their portfolios, maximize their returns, and accomplish other financial objectives. That is why it is so important for investors to have a firm grasp of the options they have to adopt alternative investments into their portfolios successfully.


By Gurpreet Singh Padda, MD, MB

Real Estate

How Real Estate Investors can Prepare for Turbulent Economic Future

Investing in the future is the smartest thing you can do now, considering the economy contracted for two consecutive quarters, the typical textbook definition of a recession. Although, the US is still not technically in a recession, as the National Bureau of Economic Research is the only body allowed to make that call (and they haven’t, yet…), the warning signs are there.

What can’t be ignored is that the economy is contracting while productivity is declining, so it’s best to prepare for the harsh economic days ahead. Because of the unpredictable economic behavior, this article will discuss how to invest in your future so you can ride through the hard times.

1. Create an Investment Plan

The first step to building a financially secure future is to create an investment plan. With such a volatile market, you need a guiding star to help you commit to the master plan and avoid panicked decisions. An investment plan lays down a strategy after gauging all the market variables. That way, you can recognize and weigh all the risks when investing, enabling you to fulfill all your obligations still. The plan should help you realize the best investment vehicles.

The key to creating a plan is to be realistic about what you can achieve. Note that creating an entire financial strategy for the future in one sitting isn’t going to work. Instead, break down each piece into smaller steps that are manageable and achievable. Once you’ve figured out the steps, write them down, so they’re easy to refer back to when needed.

2. Diversify your Investments

As is often said, never place all your eggs in one basket. Diversifying is an excellent way to get the most out of your money, even in the most troubling economic slumps. It means spreading the investments across different asset classes so that if one class tanks, another will likely thrive. Markets you can try your hand at include:

a) Invest in REITs

Real estate investment trusts (REITs) are a great way to invest in real estate without owning any property. They’re publicly traded on stock exchanges and often pay out dividends from their rental income. In a risk-off environment such as the current one, REITs are typically the oasis of hope, and it’s easy to see why. REITs offer relative inflation protection and high dividends but bear a low correlation to the stock market and have low transaction fees.

REITs are excellent investment vehicles for the long term, typically outperforming bonds and stocks in some periods. If anything, REIT’s average yield is over 3%, more than double what you would earn from S&P 500 stocks. What’s more, REITs are liquid, so you can get your cash as soon as the market opens.

b) Home Flipping 

You don’t have to own an entire rental property to reap the benefits of investing in properties. A neat trick to try is home flipping, which involves buying distressed properties at discounts, renovating them, and selling them for a profit.

c) Sandwich Lease

In this arrangement, you enter a rent-to-own agreement with a landlord, then lease it to a tenant. It’s one of the most cost-effective ways to enter into real estate, as the tenant will allow you to purchase the property after several years.

3. Concentrate on Marketing

Investing in your marketing strategy is one of the best ways to create a sustainable business. Marketing will boost sales and build your reputation, increase your relevance and demand, and cements your place among customers, creating a loyal customer base.

One of the most potent forms of marketing is digital marketing. The main way of doing this is through search engine optimization (SEO) using keywords. You target a range of words potential clients use when searching for real estate properties for Google to drive traffic to your online sites.

Digital marketing could take many forms, such as email marketing, blogging—which 56% of marketers say is effective, and social media. Posting content on social media is exceptionally effective considering 82% of Americans use social platforms.

Whichever form of marketing you settle on, you should try videos. According to Wyzowl’s research, 86% of marketers said videos helped increase traffic and generate leads, while 81% said they directly helped increase sales.

4. Automate your Savings

Automating savings is a great way to ensure you always have money available for whatever comes up. The best part is you won’t even have to think about it as it works in the background.

It’s also a great way to start investing in the future. You can set up automated transfers from checking to savings and then start saving with every dollar. It’s easy, painless, and will save you money in the long run. 

To automate your savings, use an app like Acorns or Qapital. These apps allow you to set up automatic savings plans, plan, and invest without making withdrawals at specific times as traditional banks do.

5. Start Investing in Yourself

Another great way to prepare for the future is by investing in yourself. There are many ways to invest in yourself, such as:

  • Go to class: There are many courses available online or at local community colleges that can help you learn more about real estate and expand your knowledge in readiness for the future. Most of these courses have classes on various aspects of real estate, including how to market yourself, use social media, and manage your finances.
  • Subscribe to emails from industry leaders: By signing up for newsletters from real estate professionals or companies, you’ll stay up-to-date on changes in the industry and what you can do to adjust. 
  • Listen to niche podcasts: Podcasts are another great way to learn about topics related to your industry—not just real estate. There’s a ton of valuable information on marketing, management skills, and more. 

The Bottom Line – Invest in your Future, No One Else has More of an Incentive

Just because the economy is tanking doesn’t mean you must sink with it. Since business is low, now is the best time to invest in the future and realign your business so you can reap big when the market turns hot again.

Some of the best tactics you can employ include concentrating on marketing, investing in your knowledge, diversifying your investment portfolio, and automating your savings. Before you set out, you must create an investment master plan to guide you through turbulent times.

By Gurpreet Singh Padda, MD, MBA

Real Estate

How to Master the Art of Multiple Offers in Real Estate

Making multiple offers on properties might be a numbers game, but it takes time, research, and persistence to get good at it. Once you do, you’ll realize there’s a method to all the madness.

You can’t always score a deal by simply offering a client a deal that’s 70-80 cents to the dollar; you have to do more. You have to come up with really creative offers and provide a ton of options that prospects would find difficult to walk away from.

In a nutshell, find out what the prospect wants and lay out the game: you are willing to do any reasonable price deal as long as they are willing to wait. If they aren’t ready to wait, they will have to fork out more.

Similarly, they could lower their terms and get a property at that moment. If they decide to stick to their terms, they will have to either pay more or wait longer. Whatever their choice, you will have an option for them.

For that to happen, you must have the relevant experience to know how to value a property and hit your target numbers for contingencies, bargaining strategies, and counteroffers. This is how you can assess properties and make offers that a client can’t refuse.

1. Comparable Sales Method

This method, also known as the sales comparison approach, helps to determine the value of a property. It is one of the most common methods real estate appraisers use when dealing with residential and commercial properties.

Comparable sales are applicable in this method when the property under appraisal is similar to other properties recently sold in the area. When using this method, you must consider the following factors:

  • Features and amenities: The more feature-rich the property, such as a walk-in closet or hardwood floors, the more expensive it will be than comparable properties.
  • Location and neighborhood: Homes located in perceived safer areas or near popular attractions such as parks or shopping centers are likely to sell for more than those located further away from these areas.
  • Square footage: larger homes sell for more money than smaller ones because they offer more living space and amenities. However, doubling the cost of a 1000-square-foot home won’t determine the value of a 2,000-square-foot space because smaller homes are generally more expensive per square foot than larger ones. 
  • Age and condition of the property: The age of your home may also impact how much money it will fetch when selling on the open market. Older homes have more character but less modern amenities than newer ones. 
  • Recently sold listings: Provide a starting point for determining the current pricing for similarly specced properties in the same area.

2. Rent Multiplier Method

The rent multiplier method is a simple way to determine how much you should offer for a house. If you’re trying to get a property listed for, say, $200,000, you can offer up to $2,000 per month (the multiplier) over their asking price.

So, if you paid $100,000 for your property and it generates $3,000 in annual rent, your gross rental multiplier would be 33.3 ($3,000 / $100,000). If you want to sell your home at its current value of $100,000, an offer for $33,000 above the asking price would be about right.

3. The 70% Rule

The 70% rule is one of the most important concepts you should aim to understand before starting your real estate investing career, especially if you’re into house flipping. It’s simple:

Max Allowable Offer = (ARV * 70%) – (Repairs + Holding + Selling Costs)

Where ARV stands for “After Repair Value,” which is the amount you think a house will be worth after repairs. You can estimate this number by researching similar properties in your area and their sales prices, and the average of these prices is the after-repair value of the listing, even before you sell.

Repairs are what you think it will cost to make all necessary repairs to get the property ready for sale, including painting and new carpeting. The repair estimate should also include any costs associated with obtaining permits to make changes. You may have to pay extra for these permits or inspections, depending on what kind of work needs doing.  I typically calculate the Repair cost and add 20% as an additional buffer.

Let’s say you’re looking at a house listed for $100,000 with a repair list of $5,000, and you think you can sell it for $120,000. That means your maximum allowable offer would be $79,000: ($115,000 * 70%) – $5,000.

The 70% rule is a great way to value a home because repairs may end up higher than anticipated, or the market might dip into your profits. Note that in a hot market, you might have to pay more, and in a potential declining market you might be applying a lower percentage.

4. Sandwich Lease Option  

The sandwich lease option is a strategy where a property owner (landlord) leases their property to an investor (lessor), who then leases it to the end user (lessee). The lessee pays a higher rate than the lessor, allowing them to make a profit.

It is a good strategy for beginner real estate investors who don’t have the capital to start as you don’t need to make a down payment or obtain a mortgage. You can even enter a lease-to-own agreement with the landlord, a deal you can then pass on to the lessee if they are interested.

The sandwich lease option is an excellent choice during a seller’s market where potential first-time property owners can’t afford it because of punitive mortgage rates; hence they settle for leasing.

Final word

It would be best to be a little creative to survive in the current real estate environment—the old tactics of offering 70 or 80 cents to the dollar won’t cut it anymore. You have to provide a raft of options if you are to walk away with a deal.

Explain to clients that they could get a property for the price or terms they want if they are willing to wait. To ensure you hit favorable price points, even during an economic downturn, opt for the sandwich lease option, rent multiplier or comparable sales method, or the 70% rule.

I always attempt to define the true needs of the seller and “create” my offer based upon those needs, I want the seller and myself to be sitting on the same side of the table and negotiate with the Mr. Market on the other side.  This results in a collaboration rather than a competition.  Although the examples I am giving are for smaller properties, they apply even more to multimillion dollar commercial properties.

By Gurpreet Singh Padda, MD, MBA

Real Estate

Creating Cornerstone Content That Converts Leads Into Clients for Real Estate

Real estate investors often get stuck in a rut of creating text ads, which, while effective at generating leads, rarely convert them into partners.

You should consider cornerstone content to build your brand and turn leads into partners.

Write cornerstone articles to make the potential customers’ decision-making easier. The cornerstone content should be the go-to resource for information about your industry and business that people can hold onto for reference and use as they look for more information about your services.

For instance, the return on investment (ROI) on commercial real estate is reportedly 9.5% per annum. Use cornerstone content to show how much experience you have in helping people purchase or sell such property at an even higher markup. So, here’s how you can use cornerstone content to convert leads into clients.

What is cornerstone content?

Cornerstone content is a post that provides in-depth and valuable information for your clients. It could be a series of your best articles that you intend to rank highest on search engines.

Since they provide exhaustive content that includes comprehensive information rather than sell products, they tend to be longer and more complex. It could be simple blog addition or a stand-on page.

Cornerstone content is vital because it’s ideal for building trust and credibility since the foundational content helps build traffic and brand awareness by establishing you as an authority in the industry. That is crucial to showing potential customers what you can do, making them interested in your services.

The goal of the cornerstone content is to create a positive first impression, making them more likely to convert into paying customers. For best results, create cornerstone content once or twice every month, depending on how often you publish new content on your site.

How to create valuable Cornerstone Content

Here are sure-fire tips for creating cornerstone content that will help your real estate agency grow:

1. Choose the Right Topic

It may seem mundane, but this is perhaps the most crucial step of the cornerstone content.

Before settling on the topic, you have to ask yourself a series of questions, chief among them is the major pain points or problems the target audience faces. Next, find out what hasn’t been answered sufficiently on other websites, then determine which issues you can answer competently.

It helps to ask members of your team if there are common questions they face. In addition, ask real customers too. That should allow you to formulate cornerstone content containing unique insight that addresses burning issues.

2. Keywords and SEO Optimization Strategies

It’s not just the real estate industry; the first page of Google is where all the action is. As 95% of web visitors rely on the first-page result, ensuring your website makes the cut and appears on the first page is essential.

One of the best ways to do that is through keyword optimization. It involves using words and phrases relevant to what you’re selling and what clients are searching for and answering the potential customers’ most pressing needs.

For example, if you’re selling a house in San Francisco, you might want to put “San Francisco” and “Bay Area” in your title tag and Meta description. You might also include those phrases in the body text of your page so that search engines will pick up on them.

Another strategy is ensuring your site is easily crawlable by search engines using proper coding standards and following web design best practices.

3. Be consistent with formatting and style

Your clients will recognize your brand more efficiently if your content follows a similar pattern and uses familiar language and branding. Engaging, high-quality, consistent content impacts a potential customer’s decision-making more than any other technique.

4. Internal linking

Send the most internal links to your cornerstone posts as this signals to search engines that they are the most important, allowing them to rank higher. It helps to use text links, that is, the keywords as the anchor text for links and then link within the text itself. Ensure you’re linking from pages with related content.

5. Call to Action

Considering you’re creating the cornerstone content aiming to convert them into clients, it helps to insert a call to action (CTA) at the end of the article. A CTA instructs the reader to take a course of action. You can do this by using call-to-action buttons at the end of your post.

CTA’s are highly effective, but the best performing is personalized, which HubSpot found to be 202% more effective than their basic equivalents. For instance, ContentVerve turned the phrasing in their CTA into the first-person point of view. Instead of writing “start your 30-day…,” they wrote “Start my 30-day…” and realized a 90% rise in the click-through rate (CTR). So, how do you ensure your call to action is clear and compelling?

  • Tell your readers exactly what you want them to do next: Make it clear what they need to do next. Use action-oriented writing instructing them to take action, such as clicking a link to another page on your site or even asking them to leave a comment with their thoughts. The key is to be specific, so there’s no room for confusion.
  • Ensure the CTA is visible and eye-catching: If your readers can’t see the button clearly, it won’t matter how good your copy is—they won’t click on it. Make sure that whatever design element you use for your CTA is highly visible, accessible, and super apparent where to find it. The goal of any call-to-action is getting people excited about taking action—and for that excitement to translate into clicks.

6. Promote the content

You can create the best cornerstone content, but it will be pointless if your target audience doesn’t read it. Since it takes time for new content to rank organically, make a splash by promoting the content in the meantime.

Email promotion is one of the most impressive ways of doing it, with 4 billion daily users. It’s telling that 59% of respondents said email marketing influenced their purchasing decision.

Social media is another potent outlet considering 72% of Americans use social media daily. Focus on platforms that work best for real estate, personalize text and images for each platform, and share more than once.

7. Maintenance

Finally, you must maintain the cornerstone content’s health to remain evergreen. Monitor the performance, update information regularly, improve loading speeds, and give it a style refresh every few years to keep it looking up-to-date.

Final Word

If you’re a real estate investor, cornerstone content might provide the tipping point of turning leads into clients. You can do that effectively by researching suitable topics, conducting keyword research, and creating content with plenty of internal links and a personalized call to action.

Ensure you maintain consistent messaging and branding across the cornerstone content, promote the posts, and keep updating the content to keep them evergreen.


By Gurpreet Singh Padda, MD, MBA

Real Estate

7 Real Estate Trends to Watch Out for in 2023

We are just barely into the second half of the year 2022. Much of the economic news is doom and gloom; perhaps it’s best to look into the future if one wants to find an iota of good news. For that, a glimpse of the past could provide near-accurate future predictions.

Six months on, the Russia-Ukraine war is causing a considerable downturn in every sector of the economy, including the real estate market. The ongoing war has triggered fears of a global recession, with the World Bank dropping its growth prediction from 4.1% in January to 2.9%, causing supply chain disruptions, high commodity prices, inflation, and food insecurity.  

While COVID-19 might seem like a thing of the past for most Americans, pandemic lockdowns are still alive and kicking in the “world’s factory,” China. That translates to supply chain issues, which explains why there’s a push to bring some of those jobs back onto American shores. With that background, here are the top trends in real estate to watch out for in 2023.

1. Housing Prices Likely to Remain High

According to Zillow, the typical monthly mortgage payment increased 75% between June 2019 and today. The National Association of Realtors (NAR) also states that home sales dropped 5.4% from May to June, marking the fifth consecutive month of declining sales—but median prices reached a record high in June: $416,000, up 13.4% from a year ago.

Although incomes have risen over the same period, they haven’t kept up with inflation. Wage growth in June was 6.7%, below the 9.1% rise in inflation that month. Moreover, mortgage rates continue to stagnate, and there’s the ever-present threat of further interest rate hikes. The overheated markets of early 2022 will drop precipitously in the later half of 2022 and most of 2023. But that still means, even if home prices were to drop 20-35%, they probably would remain beyond the reach of most first-time homebuyers.

2. Expect an Uptick in Mortgage Defaulters

To fight rampant inflation, the Federal Reserve activated its nuclear option—hefty interest rate hikes. Inevitably, mortgage rates rose as well, with the national average mortgage rate hovering at 5.08% as of August 2022.

Considering the August inflation rate is in the upper 8%, higher than the long-term average of 3.26% and the Fed’s target rate of 2%, it’s inescapable that the Fed will announce further interest rate hikes.

That means higher mortgage rates, and since the wage growth in June was 6.7%, below the inflation rate. As the economy continues to contract, you should expect an uptick in mortgage defaulting that will likely stretch to 2023 and beyond, and more people are likely to choose adjustable-rate mortgages over fixed-interest mortgages.

3. Affordability of Homes Still a Problem

Affordability of homes is still a challenge for many Americans, but it’s not the only one. According to a recent survey by Pew Research Center, 46% of Americans say affordable houses are still a challenge.

That is exacerbated by the rising cost of rent, with New York recording an average of $3,500 in June 2022, an all-time record high. With the raging inflation and considering rent prices hardly drop significantly over time, it’s difficult to see how homes will become more affordable in the near future.

The only hope lies with the Fed cooling down inflation sufficiently, imposing more agreeable interest rates, and the cost of living dropping significantly to lower the price of everything, including real estate.

4. Suburb Living and Higher Prices in the Suburbs

With rental prices in major cities shooting past most people’s capabilities and mortgage prices continuing to lock people out of home buying, there’s a push towards moving to the suburbs to access affordable housing.

More employees are also pushing for more opportunities to work from home to save on the daily commute. That should see the prices of suburban houses rising to meet this new demand, which should persist into 2023.

5. Prevalence of Technology Usage

The trend of increasing use of technology in real estate is nothing new, but it has become more widespread in the last few years. For instance, the NAR states that 97% of all homebuyers used the internet to search for a new home.

That trend will continue, allowing homebuyers to access a broader home listing catalog. The same is true for realtors as it will enable them to advertise to get their listings before more prospects. The apps and websites also come with matching and software to make it easier for buyers to filter homes that fit their descriptions better.

Technology also comes in handy when showcasing a home. Instead of hosting an open day which may force prospects to travel great distances, a real estate agent can conduct virtual home tours. Virtual staging will save the agent a ton of money as they don’t have to spend time and money collecting and setting up furniture that matches a listing.

You’re also likely to see an increase in drone videos and photos to capture stunning overhead footage of properties and the surrounding amenities to enhance the desirability of the listing. Social media sites that use videos and photography, such as YouTube, Instagram, and TikTok, may also prove vital as independent platforms for showcasing real estate.

6. Emphasis on Amenities as a Selling Point of a Home

In the next few years, you will see a substantial shift in how people choose where to live. What was once a matter of location, price, and square footage will soon become a question of amenities.

As more people focus on their health and wellbeing, they’ll look for homes that offer more than just a place to rest their heads. They’ll want easy access to gyms and pools, dog-friendly apartments, and pet-sitting services—and they’ll even want walkable neighborhoods with local stores and restaurants. 

7. Luxury Homes

The need for luxury homes has steadily risen over the past few years. These refer to homes that go for $1 million in the smaller cities. In major cities, that starts at $4 million.

According to luxury home marketing, single-family luxury homes only spent 12 days in the market in 2022, compared to 38 days in 2020. At 41.6%, the growth in luxury home sales in 2021 outpaced other segments of the market, such as affordable homes at 7% and mid-priced homes at 5.9%. This trend will likely continue to 2023 and beyond as the trend for buyers looking for luxury homes seems to be going strong. 

Final Word

We can use historical patterns to chart a course for future trends, and what that teaches us is that housing prices will cool down but will likely remain higher than most people can typically afford. Additionally, we will likely experience in the real estate market are the continued high demand for luxury homes, emphasis on amenities for healthy living, the prevalence of technology usage, and the continued preference for suburban living.

Real Estate

How to Be a Successful, First-Time Homebuyer in 2022

Mid-2022 is probably the worst time to buy a home. Median home prices hit an all-time high of $440,000 in July, and mortgage rates are at 5.5%, almost double what they were last year.

While buying a home now may seem a terrible idea, there are ways to bag yourself a good deal. So, these are some tactics you can employ to ensure your purchase doesn’t become a financial nightmare.

1. Do your Research

Before looking for a home, you must understand the market to know what’s within your budget. Sure, most home prices have skyrocketed over the past few months, but there are some places where it’s coming down.

For instance, according to Redfin, Salt Lake City, Boise, and Denver all witnessed at least 50% cuts in asking prices. Seven more cities, including Tampa and Sacramento, saw asking prices slashed by more than 44%.

So yes, you can still bag yourself a deal in the current environment, as long as you are willing to do the legwork and compromise on the places you wish to live in. 

2. Build your Credit History

It helps to build your credit history if you’re a first-time homebuyer. A poor credit score makes qualifying for a mortgage loan challenging or attracts high premium rates because financial institutions will view you as a risk.

If you have little or no credit history, you may need to take steps to build up your score. Here are some tips for doing so:

  • Pay all your bills in full and on time: Even if you don’t have any credit cards or loans yet, you should make sure that any bills you pay regularly (such as rent or utilities) are paid on time and in full. It will help establish your payment history and show lenders that you’re reliable with money.
  • Don’t open too many credit cards at once: If you decide to apply for a credit card, make sure that you only use one at a time so that it doesn’t hurt your credit score too much if the application gets denied (or approved but with a low limit).
  • Minimize utilization rate: Your balance-to-limit ratio (utilization rate) is just as important as payment history. It refers to the total balances racked up on all your credit cards divided by the total credit limit of all the credit cards. Aim to keep this figure below 30%. 

3. Make a Sizeable Down Payment

Making a sizable down payment toward buying your home is vital. The down payment is typically between 3% and 20% of the home’s purchase price.

You want to make a large down payment because it will lower your monthly mortgage payments, saving money in the long run. Additionally, making a large down payment means avoiding paying private mortgage insurance (PMI).

PMI is an additional fee that many lenders require as part of their mortgage loan package. It protects them if you default on your loan—but it can add hundreds or even thousands of dollars to your monthly mortgage payment.

You can avoid PMI by paying more than 20% of the home’s purchase price as a down payment. Alternatively, you can avoid a down payment by getting a piggyback or 80-10-10 loan, which covers 10% of the deposit while you deposit the other 10% from your savings.

4. Get Pre-approved for a Mortgage

When you’re a first-time homebuyer, getting pre-approved for a mortgage is one of the most important steps to ensure you find the right home.

Getting pre-approved means that a lender has reviewed your finances and determined that you can afford a home at a certain price range. Your agent will know how much house you can afford, so they don’t waste time showing you homes that are beyond your means.

5. Try Out for First-Time Home Buyer Grants and Programs 

First-time homebuyers have several financial assistance programs that will soften the sting of the hefty payments needed to purchase a home.

A first-time homebuyer’s grant refers to financial assistance you may receive to purchase your first home. It typically covers a percentage of the down payment and closing costs. Since it’s a grant, you may not have to repay the amount. Examples include:

  • Downpayment Toward Equity Act
  • Good Neighbor Next Door program
  • Bank of America’s Home Grant
  • Chase Bank Homebuyer Grant

On the other hand, first-time home buyer programs usually come from federal, local, or state governments and take the form of tax credits, forgivable mortgages and closing costs, and down payment assistance.

You may qualify for the Housing Choice Voucher if you face financial challenges due to a low income and receive minimum earnings as stipulated by your local public housing authority. A clever way to use the voucher is to fund a rent-to-own program.

Similarly, you can apply for an FHA loan. These are Federal Housing Administration-insured loans made by private lenders, usually featuring zero-interest loans and deferred payment loans. Moreover, they typically have lower down payments and require lower credit scores than most other mortgage loans. 

6. Use a Mortgage Broker and Agent

It pays to consult a mortgage broker in such a tight financial environment. They know the ins and outs of the mortgage industry, so they can find you a mortgage with lower fees, great rates, and financial perks and help you overcome borrowing challenges.

Similarly, procure the services of a real estate agent. Using an agent is one of the best ways to ensure a smooth process and a successful outcome. No wonder 87% of homebuyers used an agent in their home purchase.

Real estate agents or brokers know the market and can help you find your dream home at your price range. Ensure that the agent knows your unique needs so they can find the ideal property that fits your lifestyle.

7. Consider Variable-Rate Mortgage

A variable-rate mortgage can be a good choice at this point. You don’t want to go for a fixed-rate mortgage with fixed interest rate monthly payments throughout its lifespan, as the current mortgage rates are very high.

An adjustable-rate mortgage will have fluctuating mortgage rate payments, so you will pay lower fees when the interest rate is eventually lower. Further, an adjustable rate payment allows you to make higher monthly mortgage payments without penalty. That means there’s a chance you might pay much less than a fixed rate arrangement.

Additionally, variable-rate mortgages typically have lower initial interest rates than fixed-rate mortgages, which means they’re cheaper upfront. That could buy you some time until the interest rates finally dip.

Finally, you could refinance the variable-rate mortgage and exchange it with a fixed-rate mortgage when the interest rates eventually drop to reasonable levels and it makes financial sense to do so.

Final Word

Many potential first-time home buyers are postponing the purchase because of the hostile economic environment that has rendered homebuying virtually impossible.

Home prices have reached historical highs, and mortgage rates are double what they used to be in January 2022, with more hikes in the pipeline as the Fed is threatening more interest rate hikes.

If you must buy a home, try looking for one in states that have lowered their asking prices, utilize a mortgage broker and real estate agent to find deals for houses and mortgage rates, and build your credit history to score favorable loan terms.

Similarly, consider a variable-rate mortgage, make a sizable mortgage down payment to reduce your monthly mortgage payments, and try to secure a first-time home buyer grant or similar program.


By Gurpreet Singh Padda, MD, MBA