Why You Should Buy a Rental Property Now Before 2026 Prices Surge and Rates Drop

Hello everyone. Welcome to Talk About Houses. I'm Todd. I'm Vahna. Okay. We're actually going to make a video about a comment that someone made because he posted a lot of great information here. Okay. Perfect. Okay. So the video was called Record Suspicious Increase. Why Investors Buy Up 2025 Houses. And of course, in the last quarter, 37% of all houses in the USA were bought by investors, which is the highest value for at least five years, maybe even before that. Okay. So the person who wrote this comment has been watching the channel for a long time, but is a regular commentator. Hmm. And that's what she said. I'm going to publish the comment. We're going to talk about it. Hmm. Okay. And what do you think will happen to the real estate market if we have 4.5% interest rates by 2026? It will explode. It will explode for two reasons. First, because the interest rates have dropped, right? Second, there will be a lot of refinancing. So there will be a lot of money available again. On the one hand, because people will be able to take money from their real estate, and because they pay lower rates and will have additional money every month that they can use for other purposes. And then all the others who have held back and waited for the purchase will definitely flow into the market. What you will also see is that because of this huge influx of buyers who offer a return of several times and will basically experience all the chaos that we have experienced in the past when we had lower interest rates. The idea is that it is not a problem if you wait until the interest rates drop and the prices have risen and if you pay cash. But if you are an investor who may pay 20 to 30%, instead of taking out a loan, you can simply set the price, pay the rates and maybe not have that much cash flow. But if you then make a repayment, it is better to wait one or two years and then repay than to wait one or two years with the purchase, right? And if you start with a low interest rate that many people want, it's like a cure-all when the real estate prices drop. The interest rates are falling. Nobody sees that. Nobody sees that the real estate prices or the interest rates are falling. You are somehow the only ones and as soon as you buy, you think, okay, now it can happen, whatever. Well, and that brings us back to the point where we started. Where is the money earned? It is earned on the buyer's side. Yes, the interest rates are changing, but the purchase price is never changing. All I know, I know a lot of pilots. They all made a mortgage return in 2020, 2021. These are generally people with a high income, but they tend to have larger houses. For some of them, it was $1,000 or $2,000 a month, plus the difference in the rates for their $2.5 million house. They said, oh yeah, I have. The lowest set I've heard was at 1.9% or so. I don't know how that could be a VA set. I don't know. Okay. The next comment was that the currency is being devalued. This shows a diagram. This comes from the Federal Reserve of St. Louis. They have followed all these small, jagged lines of the last few years. And that shows what the dollar is worth compared to a series of global securities. I was in Singapore in January and there you got 135 Singapore dollars for a US dollar. That used to be $1.35. Now it's $2.55. So you get 10 cents less Singapore dollar for every US dollar. If you look at this, you can see that our dollar has fallen by 7.4% compared to other currencies. The idea behind it is that we secure a wealth value, where you get 5% on your high-interest savings account, which is worth 7 points. It is less valuable because the dollar is less valuable. You put it in a stock value. Right. Just so you understand. On the surface, that's not a great thing. But if you really think about it, it makes US goods more competitive abroad. So that means we can export more. You may have seen that in the latest trade figures. You know that our trade deficit is not as bad as usual. It also helps tourism. There will probably be more people. Okay. The next thing was the rising rental prices in my area. There were a few videos of Crash Bros. But I found the most up-to-date article. It's based on data from Redfin. The rental prices have risen in 47 of the 50 largest metropolitan areas compared to last year. In the largest metropolitan areas of the country, they have risen the most. Namely by 5.9 to 5.9, 5.3 to 5.3. So the rents are rising. That's not your income. That's the height of the rent, which is rising. So if the rent rises by 5.9% at a rent of $ 2,000, that's an increase of $ 100. So you put $ 1,200 more in your pocket per year. And if they rise by that amount every year, you put $ 1,200 more in your pocket every month. Okay. A few years ago, 21 or 22, we made a video about the four largest of the 400 markets in the USA. In 399 of them, the rents have risen in comparison to last year. Do you remember the ones where they went down by 0.1%? Vegas? That was here in Vegas. It was funny. They went down. But it was misleading. Because we literally had the two largest years with rent increases that we had ever had in two years. And then they maybe just calculated. But we had a minus of 0.1%. Everything else has risen. Tax incentives. VANA. Hm. What tax incentives are there? If you buy Bitcoin, if you buy Nvidia, let's not say, or gold, M, and you sell them, do you have some tax consequences? Right? Right. Long-term, short-term, we are not tax advisors. So there are some tax incentives. Let's talk about some of these tax incentives. Let's assume you're an investor, you buy real estate, you open a mortgage, you get a mortgage interest deduction, you can deduct investors' taxes. Yes, you can deduct your mortgage interest. You can deduct your basic taxes. You can deduct your insurance. Because those are all costs. You can deduct HUA contributions. Because those are costs. You can deduct repairs. Those are costs. Depending on the advice of your tax advisor, you could make a cost separation. The cost separation is a really attractive thing, where you can make all your deductions in advance. Depending on whether they had a good year, this can make sense to them. So there are all kinds of tax strategies that make it profitable for you to own real estate. Yes, it was funny, because I talked to someone who had sold a number of shares and wanted to make a big profit. But he wanted to spend some of the money and use some of it for the purchase of a house. And then you make the cost aggregation. You make all these deductions. So you basically deduct all the profits from your shares. So you could basically deduct the money for future tax cases for free, which you may or may not have. Right. So you know that there will be a callback at some point. However, you can delay that. You can make a 1,031 exchange and push the problem in front of you again and again. So there are all kinds of things you can do. Talk to your tax advisor. We are not bookkeepers. We are not tax experts. I have also experienced that people use this strategy. They have a house for rent, rent it and then say at some point, I think I'll sell it. Then they move in. They live in it for a few years and then sell it. What happens? Do you pay taxes on profits from your main home? You have to live in it for a few years and then you don't pay taxes anymore. At least that's what the current tax law suggests. It's interesting that you could rent the house for about 20 years. But if you live in it for a few years, it magically becomes a point. And then I read this story. That's super funny. There were people who literally got married because they had made about $450,000 in profit with their house and they didn't want to pay it. You know, the limit for one person is 250. But for a couple it was literally that they just got married to say, hey, I have to get married. Let's get married. So I can't pay this tax. Because if you have a very low income, don't have a lot of money and just made $500,000 with a house, that's great. But the $50,000, $60,000 or $70,000 that you may have to pay taxes on are a big blow to your life. So maybe it's worth getting married. I found that very funny because I would never have thought of getting married to save taxes. But here's something else. The actual real estate prices in the United States. The blue line is the actual Fed line. You can go to F. You can go to Fed. Federal Reserve. And you can call up all these great diagrams. These are all data that the Federal Reserve has collected. This is indexed. The interesting thing about indexing is that we, when we go back to 2012, are about at the time when the blue line crosses 100. At some point in 2012, that means that the number is a percentage. 110 means that the prices have risen by 10%. 120 means 20%. And as you can see, they have risen by 60% from 2012 to today. The real estate prices have risen by 60% in the last 12, 13 years. That's not unusual, because the wages have probably risen by that much. The VPI probably by that much. And the stock market has risen by a lot more. Right? A lot of things have risen. Gold. Bitcoin. Everything else has risen by a lot more. But I have drawn this trend line. This is just a line that I have added here to give you a perspective. You can see the rise from 2020 to 2022. A lot of people look at this. And I show this diagram for two reasons. First, I would like to point out something very interesting. You can see that there are places in the diagram where it rises slightly and then maybe goes sideways or a little down. And it goes up and sideways or down. All sideways or downwards are spring to autumn. You can literally see that the real estate prices either stop rising or drop a little. Stop rising or drop a little. From 2020 to 2022, the prices mainly rose. Because the demand was uninterrupted for two years. And then you can see that they have kind of tangled up, sunk and then hardened, so to speak. But you can still see how La went up in 2023 and then went down a bit, went up and down in 2024. And then it's the end of 2025. You can see that we are now in the phase from spring to autumn. And I have drawn this line. A lot of people look at this too. Because you don't just get rent when you buy real estate, but you also get a future increase in value that you don't get when the money is on a high-interest savings account. And if you bought Nvidia or Bitcoin, that's great. But you don't get monthly rent payments. I have nothing against cryptocurrencies. I have nothing against gold. If nothing goes to Nvidia, you know, we are of course invested in everything. Also in real estate. But our expertise is real estate. So those are the reasons why we invest. That is the reason why our investors invest. That is the reason why the people who follow the channel try to understand how high the value is. A short story. I have spent a large part of my life with my grandmother. Who has heard the story before? She lived on $300 a month. If she could have afforded a real estate, and that in a very poor part of Texas, then this doubling of her money would have literally changed her life. She would have been able to afford much more. She might have been able to afford a slightly better car, and the house had no air conditioning, and that in South Texas. She lived very, very poorly. She had no washing machine and no dryer. She washed her laundry in the sink and hung it up in the garden. It was as if you were typically very poor. And I have spent over a decade of my life, I don't know, three months a year in this environment. If you understand that, say someone who is an investment banker and says, oh, we have a few rental properties. He is probably a professional or owns a sanitary company or whatever. He probably earns a large part of his income with it, or you are a real estate agent or a pilot or whatever. But for many people that is a change, like a rental apartment, which could literally change their life and that of their family. Sure. Yes. As always, thank you for the comment. M, eh, I thought it was pretty cool to see that, and for all the listed reasons. And then there were actually people in the comments below who said, hey, I literally do exactly the same. And then I talked to someone who said exactly the same thing today. Yes, very interesting. M, leave us your comments on the topic of real estate. We look forward to it. Remember to like the video, subscribe to the channel, activate the bell and share the video. See you in the next video. Bye.