By: Shmuel Shayowitz

I was recently listening to a podcast where they interviewed a highly successful real estate investor. This woman was a school teacher turned professor who bought her first rental property for $80,000 “all cash.” She now has a real estate portfolio of almost forty homes with an estimated value of over 10 million dollars. The topper is that she only started doing this about six years ago.

One of the things that she emphasized was how conservative and ignorant she was about buying real estate in the first place. Her first few purchases were all made with her own funds or with partners she brought in for their cash. She thought she was astute but then met someone who opened her eyes to how she could grow and build real wealth.

From that moment on, only a few short years ago, she bought all the properties alone, each with a mortgage. She used different mortgage products depending on her objective, such as whether the properties would be long-term holds versus short-term flips. From her own assessment, had she used leverage financing correctly from the beginning, her portfolio might be worth more than double today.

Her primary goal was to supplement her primary income because she was underappreciated in a career that she no longer enjoyed and a job that was not giving her the financial security she needed. Imagine being in a field where everyone tries to avoid your offering, and no one wants your product. This brings me to me; I came to the realization that ‘no one wants a mortgage!’

For many, the notion of having a home means tirelessly working to “make a living” and cover their mortgage and expenses. Everyone wants a home. Everyone wants to see their house appreciate in value. Everyone wants the benefits of living in a specific school district or community where they can meet new neighbors and friends. Everyone wants the ability to personalize and improve the dwelling in which they live. Everyone wants the comfort and security of not being forced to comply with the demands of a landlord. Everyone wants to build equity and net worth through real estate. They just don’t want to kill themselves to pay a mortgage.

Most people work for their mortgage. The reality of the matter is that your mortgage should be working for you. If you went over to sophisticated business professionals and entrepreneurs and told them you would give them $500,000 in cash today, and they would have to repay you $3,000 a month for the next 30 years, most savvy people would make that exchange every time. It goes without saying that the investment and return on the $500,000 would need to be safe, reliable, and prosperous.

Most Americans need to realize that financial leverage, when done prudently, maximizing tax benefits and opportunities, can lead to tremendous economic well-being. Unfortunately, the average household is currently “equity-rich and cash-poor.” Too many people have taken out the wrong mortgage, or none-at-all, and have yet to capitalize on making their money work for them. I continue to make financial literacy a foundation of my career and spend time with anyone looking for free financial advice – regardless of whether they need a mortgage or not. Don’t squander the opportunities!

As a reminder, if you want to learn more about how inflation, rate hikes, and an impending recession impact residential housing & real estate, join my webinar by visiting www.approvedfunding.com/webinar2023.

Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at Shmuel@approvedfunding.com.

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