Why We Turned Down a 5% Rate Mortgage

Mindy:
Welcome to The BiggerPockets Money podcast, where Carl and I give an update on our finances and what we’ve been doing lately. How we funded this deal was super fun. We decided not to get a mortgage on this property, because investor mortgages were 5% in June and I am not paying five whole percent. That’s crazy. Which sitting here at the end of October now looks really, really sweet.
Hello. Hello, Hello. My name is Mindy Jensen. And with me today is Carl Jensen, host of The Mile High FI podcast, editor in chief of 1500days.com and Mr. Mindy Jensen for the last 20 years.

Carl:
Wait, when did I become Mr. Mindy Jensen?

Mindy:
January 19th, 2002. Weren’t you there? You were there.

Carl:
Oh yeah, that was when we got married, right?

Mindy:
Yeah.

Carl:
Okay. I will take that. I am wifi now, which means you are the main income earner. And I look at pictures of dinosaurs online and work on houses. And yeah. So Mr. Mindy Jensen, I’m good with it.

Mindy:
Yeah, good. You should be because you are. Carl and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.

Carl:
Whether you want to retire early and travel the world, go on to make big time investments in assets, like real estate or dinosaurs, or even start your own business, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams. Launch yourself, I think of a guy in a cannon ball thing at a circus. Is that what that means? It sounds a little violent. I don’t want to launch myself that hard.

Mindy:
You don’t have to launch yourself that hard. It’s your journey. You can launch yourself at your pace. Also, you slipped in invest in dinosaurs. Do you think that’s a good investment, investing in dinosaur skeletons?

Carl:
We have a triceratops’ skull. That was your idea, not mine.

Mindy:
Well, okay. I would like to make that note that it’s not a real triceratops’ skull.

Carl:
True. Those are like $80,000, I did look. Our fake one was like 2000 or 1000.

Mindy:
It hangs over the fireplace, because why would you put a moose skeleton when you could have a triceratops instead?
Carl, what have we been up to? Certainly not tracking our spending.

Carl:
Yeah. We fell off that bandwagon and we fell off really, really hard. What happened? Why did we stop tracking it? What did we buy that kind of made us stop tracking it?

Mindy:
We bought a small thing called a house.

Carl:
Kind of spontaneously. We were walking down the street, we found the people wanted to sell and we made them an offer. It’s a little bit longer than that, but that’s almost how it went down.

Mindy:
We made them an offer they couldn’t refuse.

Carl:
Yeah. So we’ve been super busy, which I think we’re going to talk about a little bit later in this episode. Super busy. And when we get busy, sometimes things drop off and our tracking, our spending, our general spending dropped off. We did track our spending for this DIY remodel, which we’ll talk about later.

Mindy:
I would like to address the tracking your spending thing. I’m going to throw you under the bus and say it’s all your fault.

Carl:
I’ll take it. I’m Mr. Mindy Jensen. I’ll take whatever abuse you throw at me.

Mindy:
But we believe in, well we believe, we don’t believe in it because we’re not actually doing it, but I believe in tracking your individual expenses in real time. I think it’s very, very helpful for a lot of reasons. Stupid purchases make you think, like a Kirkland tee shirt.

Carl:
It was only $6.

Mindy:
Only $6. We could have put that $6 into VTSAX and in 100 years that would be $60.

Carl:
You’re right. Stupid purchase.

Mindy:
But stupid purchases make you think when you have to enter that into your spending tracker. And when you are sharing that with somebody else, they will potentially call you out. Why did you spend $76 at Bob’s House of Stupid Stuff? And you’ll have to say, well, I really found this amazing tee shirt and I wanted seven of them. And you can also spot trends in real time and make changes in real time, as opposed to at the end of the month when you go into one of the spending trackers that is more of a overview of what you did the past month. Well, it doesn’t give you real time information. It’s like, hey, this is what happened 30 days ago.
And so I like the tracking that we’re doing with the Waffles on Wednesday spending tracker. However, it can be a bit much when you have to remember that every single time you make a purchase. And we were spending a lot, a lot, a lot of money at places like Lowe’s and Home Depot. When we bought this house, we then had to buy a lot of supplies to remodel it because it was ugly. Our specialty.

Carl:
Yeah. I still would have bought this Costco or Kirkland shirt even if we still did the spinning tracker.

Mindy:
Oh, stop. This isn’t about your shirt.

Carl:
Maybe not the triceratops’ skull. That was a big one.

Mindy:
Well, we bought that last year. And I still would’ve let you buy that for me for Christmas. That was my Christmas present. I love it. So another reason that we stopped tracking our spending is that we are in a very fortunate financial position where this spending tracking didn’t change our financial position. If we went over budget, if we went under budget, we are still in a really good financial position. And a few years ago, maybe this would’ve been more important to us. A few decades ago, this definitely would’ve been more important to us. But the exercise doesn’t change our financial position and we are juggling so many balls right now, something has to give. It was really easy to let this one go. My biggest takeaway from this is to not make sweeping public announcements about things like, I’m going to track my spending for a whole year, because circumstances change and then you kind of look like an idiot.

Carl:
I think I would like to do this spending tracker in the future. And I’m curious to hear your thoughts on this, because for me at least it gamifies it. I love looking at numbers. So logging into the spending tracker maybe three or four times a day, yes, I’m obsessive, makes me want to spend less and makes me want to gamify my life. My tendency isn’t to spend willy nilly on something if I know I need to look at those numbers, and that those numbers being smaller excites me. What do you think, would you do this in the future? Next year would be the obvious time to start it back up again.

Mindy:
Oh, I was going to introduce it in November.

Carl:
Okay, cool.

Mindy:
Yeah. Let’s do it in November. November is typically our very most expensive month because I love Thanksgiving. I host Thanksgiving every year. And it’s very, very big. Plus Christmas gifts you start buying in November or December 23rd.

Carl:
Do I get the Tesla? When will that be, a November or December expense? That’s going to blow the spending tracker out of the water. Maybe we should start next year. And we’re actually not buying a Tesla, I don’t think. That was a joke.

Mindy:
Yeah, no we’re not. You ruined it. I was going to say, do I get the Tesla? No.
Okay, so let’s look at this house that threw our whole spending tracking publicly out of the water. What did we purchase this house for?

Carl:
Yeah. Do we have way back machine noises? We need to zoom back to May. So three houses ago I think we looked at each other and said we’re never going to do another rehab. We’re going to buy a nice house and sell sail off into the sunset, raise our children. And that did not happen. We bought another one to fix up. And then that neighborhood ended up not agreeing with us eventually. All our friends and neighbors moved away that we enjoyed, so we moved to another one, which also needed a lot of work, which we’re sitting in right now, which isn’t quite finished. And we said this is going to be our last one.
But before this one was even finished, we went and bought another one. And this all happened in May. We were taking a walk around the neighborhood and I saw what looked like someone moving out of their house. So I chatted up the person, he’s like, “Yeah, the owner is moving out. She’s old. She’s going to go to an assisted living facility. They’re going to put this on the market in June.” We gave them our business card, and sure enough they called us. And I didn’t really expect that, because whenever we’ve done something in the past, it’s kind of like a yellow letter, maybe. What’s that called? Is that the right word?

Mindy:
The yellow letter.

Carl:
Yeah. I should know this, BiggerPockets and all that. But we did that. And they called us back and said, “Yeah, how much?” We said, “How much do you want for the house?” And we got to a number. And boom, we closed in June, right?

Mindy:
We closed in June. What was that number that we got to eventually?

Carl:
And this was interesting. So they said, “What’s the first rule of negotiation? It’s that you never throw out a number.” So we said, “How much do you want for it?” And they’re like, “550.” So I had the number 500 in my head. So we threw that back at them and we came to an agreement on 510. One interesting thing about this number, which we’ll talk about a little bit later, is we agreed on this number and we made this purchase right before everything turned and went south. So it was a completely different time than it is right now. Cue the scary sounds, like the violins. It’s Halloween.

Mindy:
This isn’t coming out on Halloween.

Carl:
When you’re about to get stabbed. Okay, sorry.

Mindy:
But yeah, we purchased it for 510. And we were a little hard ballish on the negotiations because the timing was not right for us at all. And we wanted the house, but we didn’t desperately want the house. And I think that is a really good negotiation tactic is always be willing to walk away. There is, I don’t know, 86 batrillion houses in America or something. So that may not be an accurate statistic, but there’s a lot more houses than just the one that you’re looking at. So if you find a house, and you really like it and you think it’s worth x, offer X. And if they come back and say, oh, we want x plus 20%, just tell them, it’s not worth that to me. So good luck in your search for a buyer and we’ll be here if you want to sell it to us for X. And sometimes they come back at that and sometimes they don’t.
With this particular one, we were able to, we said 500, they said, “Would you go to 510?” And we looked at each other, we said we could do it for 510. We would be fine with that. How we funded this deal was super fun. We decided not to get a mortgage on this property, because investor mortgages were 5% in June and I am not paying five whole percent. That’s crazy. Which sitting here at the end of October now looks really, really sweet. But at the time our margin loan, we have a loan against our stocks, our after tax stock portfolio, kind of like a HELOC for your stocks. And we took a loan out. That rate was what? 1% at the time.

Carl:
It was a little bit more than that. It was 1.2, 1.3%.

Mindy:
Which is much lower than five, so we went that route. Apparently oblivious to the fact that the Fed was going to raise rates significantly in June and our margin loan went up. But even when it went up, it didn’t go up that much in June?

Carl:
No. This was kind of before the whole world went crazy. I don’t remember having these thoughts or worrying about inflation when we did this. So yeah, I thought, ah, it’s 1.2, 1.3%. This is great. 500,000. What is that? 6,000 a year for interest. That’s great. That’s fantastic.

Mindy:
Yeah. So since then, the rates have gone up three times. And that 5% mortgage is looking pretty sweet, which it’s unavailable to us. And what is our margin rate now?

Carl:
It is about 4.5%, but it changes every day. This is a variable rate that depends on a lot of different things, including what a Fed is doing. I know we’re recording this in October, but there are more interest rate raises promised. I think a 0.75 rate. So this is going to continue to go up. So it’s roughly tripled since June. How many months is that? In four months it has tripled. Yeah, the dangers of margin borrowing.

Mindy:
And it goes up every day?

Carl:
Yeah. Yeah, it can change every day.

Mindy:
Oh, wow. I don’t think you told me that when we’ve borrowed this money. We need to have a conversation after we stop recording.

Carl:
Uh oh. I might not be Mr. Mindy Jensen after this.

Mindy:
Nah, you’ll probably still be Mr. Mindy Jensen. I mean, I don’t guarantee it. So we still have margin available. But what about this weird situation with the … Let’s talk about the margin loan and what does that mean?

Carl:
Yeah. And our rate is still great. But yeah, a margin loan means we are borrowing money against our post tax stock portfolio. So the amount we can borrow depends on the value of our stock portfolio. So an interesting thing has been happening, as the rates have been going up, stocks have been going down. I think as of this recording, the S&P 500 is down, it’s over 20%. What is that? Official bear market territory or correction territory? I don’t know those terms. So that has done a couple different things. That has reduced the amount we can borrow and it’s also reduced our options maybe depending on how you look at it. So the first one is reduced what we can borrow, because E*Trade wants to get their money back. They want to make sure that I’m going to be able to pay, that we are going to be able to pay this money back.
So the lower our stocks go, the less money they give us. And if it got too low, they would demand that we start paying it back. So if you do this, stay very, very, very far away from the edges. You don’t want to get called out on margin. Then at the same time, this particular moment in time is kind of difficult for us, because we don’t want to sell stocks because they’re down 25%. So these are the dangers of borrowing on margin. I’m still not worried, because one of the things we’ve always done is we stay very, very far away from that edge. Now it’s gotten a lot closer. I think originally when we took out this loan we had a buffer of about a million, and now it’s down to somewhere like 200,000. So it has decreased a lot and we could get margin called. I don’t think we will. But if you’re going to do this, the lesson to learn from us is to stay very, very, very far away from the edge of that cliff.

Mindy:
Yeah. We had a huge buffer before and it has gone down through no fault of our own, although, well I guess it’s partially our fault. What is our stock mix? It is very tech heavy, isn’t it?

Carl:
Yeah. So we got pretty fortunate, I’m a tech and car nerd. We bought Tesla stock in 2012. And that’s been great. I think our cost is a dollar or something like that and now it’s like 200 bucks. But it’s also very volatile. It’s also been cut in half from its all-time high, which makes the margin loan a little bit riskier. And they’re going to give you less money and give you less margin if you’re in a risky or a more volatile stock like that versus VTSAX, the total market fund.

Mindy:
So that’s a problem. And something we did to try to hedge our bets a little bit is we went out and opened up a HELOC against our primary residence. The problem is we had just refinanced our mortgage on that property and taken out as much as we could. And on that one, right?

Carl:
Yes.

Mindy:
Didn’t we cash out that money on that? So there’s not a lot of opportunity to borrow. I think they gave us 108, $120,000 on the HELOC.

Carl:
Yes.

Mindy:
Which is great if stocks only dip a little bit. But if stocks go into a bit of a free fall, we would most likely just get completely called out. And when they sell, I don’t believe they give us the option of what we want to sell. I believe they sell our stocks for us, which is not ideal. So yeah, like you said before, I want the people listening to take a lesson from us. And I don’t regret at all borrowing against our stock portfolio. I do think that this is going to be a really great property for us when we get it up and running. We are going to take every bit of the cash flow from it and put it into paying off that margin loan as soon as possible. I would do it again, even with the rates.
And while I am lamenting the fact that we didn’t lock in a 30 year fixed rate loan at 5%, we still haven’t paid 5% yet on our margin loans. And the Fed is now indicating that perhaps the rate increases are going to slow down. Remember that article from the other day?

Carl:
Yes.

Mindy:
So that’s exciting. Maybe we will get stopped at 5% or 6% for a little while, which will make this gamble worth it. And I think this was a gamble. I mean, we’re still in a really great position to, if we get called out, we get called out, that’ll stink, but we’ll deal with it at the time.

Carl:
Yeah. I’m not worried at all. I don’t lose sleep over any of this because we still have plenty of margin. Yeah. And soon this is going to start making money instead of consuming our money.

Mindy:
Yes. And we’ll be able to pay it off. Let’s talk about why we bought this house.

Carl:
Yeah. Whenever we’ve bought a property, we’ve always had multiple exit strategies. So we could either flip this house when we’re done with it or we could turn it into some form of a rental. We’re not going to flip it because of what’s happening. Yeah, real estate prices are kind of down a little bit now. It’s not an easy time. So we are going to turn it into a rental, and the form of that rental will be a medium term rental where we’ll do 30 days plus.

Mindy:
But we didn’t purchase it as a flip.

Carl:
No. We thought it would’ve been one of the potential exit, but we had never planned on doing that.

Mindy:
Yeah. It’s an option, but it’s not our primary option. One reason we bought this house is it is right next door to a friend. And it is a ranch style house and we are both getting a little bit older. Sorry, spoiler alert. The current house we live in has stairs everywhere. It’s a split level and there are four different levels in this house. So if you’re 85 years old, this isn’t really the best house for you. That house has a basement, but the only thing in the basement is the furnace and the washer and dryer. We’re making plans to move the washer and dryer upstairs so that there’s never really going to be a reason to have to go downstairs. If there was anything, it would be to change out the furnace filter, which you should do every month. And that’s something that’s easily hired out to a handyman as opposed to making somebody do all of your laundry.

Carl:
Yeah. Should we talk about what we’re going to do with it and more on the month to month rental?

Mindy:
Yeah, we should absolutely talk about what we’re going to do about it. That’s what we’re talking about right now, why did we buy this house and what are we going to do with it? It’s a weird house. It is one giant room with three bedrooms right off of the giant room. The giant room has 16 foot ceilings, and wood floors and drywall everywhere. And you walk in and it is just an echoy sound bouncy mess. So it’s terrible for recording podcasts. It’s also just terrible for children who have to go to sleep when you, the adult, don’t have to go to sleep. And we have two kids who are still in school. So for right now it doesn’t fit our family’s needs, but down the line it will fit our needs when the kids are out of the house. And we wanted to buy it now when prices are low. We wanted to rehab it now while we are still spry and can do it. And we will hold onto it as a medium term rental.And this is different than short term rental. This property actually doesn’t qualify for short-term rental because the HOA that we’re in doesn’t allow for short-term rentals. This is something that you need to know if you’re buying a property and you’re considering short-term rental as an exit strategy or as a investment strategy. If your HOA doesn’t allow it, you can be sure your nosy neighbors will tattle on you to the HOA and you will get shut down. So even though our neighbor lives next door, we are not going to chance it. We are going to follow all the rules and turn it into a medium term rental, which is a minimum of 30 days. BiggerPockets has a brand new book out called 30 Day Stay, which is written by Zeona McIntyre and Sarah Weaver. And it is a great step by step on how to set up a medium term rental.
It has a lot of the benefits of a short term rental with the higher per stay rent, and a lot of the benefits of a long term rental in that you’re not cleaning it all the time and you’re not responsible for all the supplies. And this really worked out for us in the long term, because our area had a fire at the end of last year and 1100 houses burned to the ground. An additional 2 or 300 were severely damaged. So there’s a lot of people in our area who were displaced. And when I was at the BiggerPockets Conference, I spoke with Elizabeth Colgrove, hi, Elizabeth, and she told me about a company called ALE Solutions that connects homeowners like me who have furnished or unfurnished rentals with insurance companies who have displaced tenants and allows them to connect and rent out their properties to these people at a higher rate than I would normally get on a long term rental.
And I think the trade off is that when the tenant’s house is ready, they can just leave. They don’t really give notice, which is fine because I’m making a lot more money on the per month rent. So, oh, you’re done and you’re leaving at the end of the week. Great, see ya. Thanks so much for taking care of my property. So I’m excited about that prospect. It was really, really sad to watch the people who were displaced try to find housing. It’s one thing when one house burns down, but it’s quite another when an entire community burns down. And being able to be part of that solution is going to be really great.

Carl:
Yeah. Should we talk about the rehab a little bit?

Mindy:
Yeah, we absolutely should. What did this rehab look like? What did the house look like before we bought it?

Carl:
It was pretty ugly. This house was built around 1980 and it looked like it was built around 1980. At least the kitchen was all the same. The bathrooms had been redone but not nicely. They looked like 90s bathrooms. Yeah. So far we’ve spent $30,000 on it. And I want to emphasize it that it’s only $30,000 because we’ve done most of the work ourselves. I think it would’ve been at least triple that if we would’ve outsourced the entire thing. Labor is very difficult here. Well, it’s always been difficult, but those fires exacerbated the situation. If you’ve got 1100 homes that need to be rebuilt or built, everyone who knows what they’re doing, everyone who knows how to even hold a hammer is going to be employed for a lot of money. I wouldn’t recommend this strategy if you don’t actually enjoy doing the work. I enjoy the design in doing the work, so it’s okay. And it’s, oh, a temporary part of my life. When did we start on this, in September?

Mindy:
We started this in September.

Carl:
September. Now we’re only in October and we’re almost done, which is pretty, it’s breathtaking actually. We’ve put a lot of work into it and hired a couple friends. But what have we done so far? We’ve gutted a kitchen. This house had carpet in the bedrooms, I don’t like carpet. One of the bedrooms had old icky looking pergo, like the old fake floor, not the nice LVP. So we took all that out. We put in new floors. We completely got to the kitchen. There were a lot of repairs that needed to be done as well. Leaks in the roof. And we’ve gone through and fixed all this.

Mindy:
You say we gutted the kitchen. I don’t think that’s an adequate representation of what we did. I would like to pause here and invite everybody to go over to the YouTube channel and watch right now, just take a peek at the before and after pictures of this kitchen, because holy cow, was it ugly? My friend Ray announced that the kitchen was a one butt kitchen, meaning only one butt could fit into it at a time. And I’m not a very tall person, but I can touch the ceiling in the kitchen before. And now we ripped out that whole soffit and the ceiling goes all the way up to 16 feet. We spread out the kitchen a little bit. So you see the before picture, you see the after picture and they’re just so much different. The home is such a different feeling now because we changed out the kitchen. And this was $11,000 in IKEA cabinets and countertops and $3,600 in appliances.
And we’ve done $4,000 in flooring around the house. That is the wood floor. We wanted to match the oak floor that’s already in the house with the oak floor that we were replacing that gross carpet with. You say you don’t like carpet, this was also industrial grade carpet. It was old and just absolutely filthy. I could not in good conscience keep this carpet in there. And then it would’ve been cheaper to install carpet rather than the hardwood floors, but we went with hardwood floors because we like it better and we wanted to match what was already there. It was about $4,000 because we had to build up the floors. I’m not sure what’s going on. The whole house is just a big, weird house. The floors had to be built up, what? An inch and a half or an inch and three quarter?

Carl:
Yeah. And there was a cement slab underneath. You can’t install hardwood on cement slab. So we had to put a vapor barrier down and then build up plywood to do with the nail down three-quarter inch red oak installation.

Mindy:
Yeah. But we also had to build it up because the other floor was already built up significantly higher. There was a step down into every bedroom. It was just very strange. Every bedroom door, instead of having an actual door on it, it had a sliding glass door, like an outside patio door, but inside the house. And it’s even dumber than it sounds. It was really, really strange to walk in there and you’re like, why are there sliding glass doors all over this whole house?

Carl:
Yeah. Frank Lloyd Wrong designed this house.

Mindy:
So, so far we’ve put in about $30,000. We paid approximately $3,000 to our friends to help us with some of the labor, some of the tearing out of the kitchen, and the installing of the plywood, building up of the floors and things like that. Drywall, installing the doors. I actually installed all of the hardwood floors myself because I am a rockstar hardwood floor installer. Also, it’s not that hard. And I put together all the IKEA cabinets myself because I am a rockstar IKEA cabinet installer. And also, it’s not that hard. Oh, I put them together. They hung them. They’re very heavy and they’re big. So I can’t do that. The guys did that. So, yeah. How much more do you think we’re going to spend on this property?

Carl:
The other thing that we are going to pay for someone to do is to refinish the floors. We’ll probably pay someone to do that and that’ll probably-

Mindy:
There’s no probably about that. We will.

Carl:
Yeah. I’m not sure how much it’ll cost. Probably $3,000, 3 4,000. I’m not sure what the cost per square foot is. But that’ll be the last big expense. Then we just have a lot of finishing stuff, like doorknobs, maybe a little bit more paint. And that’s going to be it. Most of our spending is done, so we’re going to get out of this under $40,000, which is great. And that includes the furnishings as well. Since this is a month to month rental and it’s going to be furnished, and we have bought most of that. It took us a while to do that, but yeah, most of that’s done. And we’ve been able to do it on the cheap, which is good. Cheap, but it looks great.

Mindy:
So we were able to do it on the cheap because we had time. We bought it in June and we knew that we were not going to be turning it right away. But we knew we were going to be turning it into a medium term rental. So we reached out to Zeona McIntyre, the author of 30 Day Stay, a new book from BiggerPockets Publishing, available wherever you buy books. And we asked her to come over. Don’t laugh at me. It’s a good book. We reached out to her and we asked her to come over because she just lives right down the street from us. And she came over and she looked. And she said, “You could furnish this on Craigslist, and Facebook Marketplace and places like that and buy used furniture, but it might take you a while to find everything. So if you’re looking to furnish it quickly, you should buy new things and I can help you with that if you would like.”
And we looked at each other and we thought about it for a bit. And if we needed to do it right away, we would’ve taken her up on the offer. But because we had time, we thought, let’s try this Facebook Marketplace and Craigslist. And were able to find an item here, a bed there. We bought new mattresses, but we bought bed frames on Craigslist and Facebook Marketplace. And I think it turned out really, really well.

Carl:
Yeah. The key to this whole strategy is, and I had to reset a little bit because I had some furniture that we got from neighbors. And Zeona came in and said, “No, you can’t have that. That looks like it should be in a fraternity house or something like that.”

Mindy:
She wasn’t wrong.

Carl:
Yeah. She wasn’t wrong. And I’m like, “Okay, you’re right. I have no style.” Hence my Costco tee shirt. Anyway, so we picked out some furniture we liked. We knew what lines we wanted to buy. And then we just set up an alert on Craigslist and Facebook Marketplace, so as soon as any of these things were listed, we would get an alert and we could jump on it. And some of the items took a month or two to find, but that was okay because we had the time. But that’s a great strategy. Find furniture that you want and then set up an alert that way you’re not scouring the internet, you just check Facebook or your email a couple times a day. And when something shows up, jump on it.

Mindy:
Yeah. And I thought that was a really good strategy. And if by the end of the rehab we didn’t find everything we needed, of course we would’ve gone out and bought new items. We do have one more bed that we’re looking for, but we have all of the drawers, and dressers and the furniture for the living room. The kitchen still needs to be outfitted a little bit. But again, that’s actually probably going to come from just go on target.com and have it all shipped to the house because I don’t need to touch that stuff when we go there. That’s another really great tip is you don’t need to be in the store to buy it. If you know that you need place settings for eight, you can go to target.com or walmart.com and buy place settings for eight.
I don’t really like IKEA dishes. Can I say that? Should I not say that? They always seem to chip, so I would not recommend those. But the furniture is awesome if you like setting up furniture forever. And if you don’t, you can hire somebody on Task Rabbit to set it up for you. One final note that I want to just remind people of, I know I have said this before, if you feel like I’m harping on this point, it’s for a good reason. We didn’t use an owner-occupied mortgage on this property, which would’ve come with a much lower rate, because that is mortgage fraud, which is a felony. And I don’t want to be a felon. And I know that there is a lot of chatter all across online saying, “well, how are they really going to know? How are they going to know if you didn’t move into this property?” And I have not personally known somebody to get caught for mortgage fraud, but that doesn’t mean it doesn’t happen.
And back on episode 303 where we interviewed John Leland, who was my go-to lender until he moved to a new company, he said that he has known many people who have gotten caught for mortgage fraud. And it’s a felony. I’m a real estate agent. If I become a convicted felon, I lose my license. I mean, I don’t want to be a felon for a lot of reasons, but I also don’t want to be a felon because I would lose my real estate license. I don’t want to go to prison. There are a lot of reasons to not commit mortgage fraud. And we had no plans to move into this property, so that’s why we didn’t get an owner-occupied mortgage. You can gamble at your own risk, but I recommend not.

Carl:
Yeah. Financial freedom is pretty great, but just freedom in general is pretty good too.

Mindy:
Yeah. Physical freedom’s even better. Okay. Well that is our update. If you are still wanting to be a real estate investor, I’m still bullish on real estate investing. I think there are still deals to be found out there. Even in this crazy interest rate market that we find ourselves in, I still believe that you can find a great deal, and get a higher interest rate mortgage now and refinance when rates come back down. I do have a lot of confidence that rates are going to come back down. I don’t think you should be investing with the idea that rates are guaranteed to come back down. But my professional opinion, my personal opinion is that rates will come back down.
And talk to your lender about your options before you get a loan. But talk to your lender about recasting your mortgage or a rate and term refinance. Ask them what other options are available. Right now your lender has an awful lot of time to talk to you, so ask them all the questions you can possibly ask about potential refinances, potentially changing the interest rate on your loan. And what are some lower cost options? The rate and term refinance is going to be different than a full refinance. Recasting your mortgage is going to be a different lower charge than a complete refinance. So talk to your lender about your options and see what they have to say.

Carl:
Yeah. We talked a little bit about our margin situation, but this is just a short term crazy world. But you have to be careful too, what’s the Charlie Munger quote? The market could stay irrational longer than you can stay solvent, so you have to be careful. But as long as you’re in it for the long term, just like stocks, everything is going to be okay. We’re in this crazy situation now, but it’ll revert and we’ll be back to normal.
And the other thing I think about situations like this is every time there’s some kind of strife or insanity going on in the world, that’s always an opportunity for someone. It might not be the same opportunity that there was for people six months ago when rates were low. But for example, right now off the top of my head, if you have cash and can come in and buy a house, you’re probably going to be able to find some deals. Yeah. But if I could say anything, it’s just be in it for the long term. And that goes to all kinds of in investing. If you’re in it for the short term, you’re probably not doing something right and you’re more likely to find yourself in a bad situation, because short term trends are very hard to predict, where in the long term, everything’s going to be okay.

Mindy:
Yep. Now is the time to be conservative when you’re running your numbers, but you could find a really great deal just because somebody else needs to get out.

Carl:
Yeah.

Mindy:
Okay. Carl, where can people find you?

Carl:
I’m at 1500days.com, and also the Mile High FI podcast, milehighfi.com.

Mindy:
Thanks. From this episode of the BiggerPockets Money podcast, he is Carl Jensen and I am Mindy Jensen, saying don’t scowl little owl.

Carl:
See you later, dinosaur-ater. That didn’t make any sense.

Mindy:
That didn’t.

Carl:
That was horrible.

Mindy:
Wow. You’re taking the role of suck.