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10 Good Reasons to Stay In or Enter the Market Now












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Personal Real Estate Investor Magazine



10 Good Reasons to Stay In or Enter the Market Now, by Andrew Waite, Personal Real Estate Investor Magazine
By Andrew J. Waite, Publisher of Personal Real Estate Investor Magazine

We are cheerleaders for an industry and market that we believe have a vast upside for the wise investor.

BEAT BACK THE NEGATIVE

We believe we have just lived through the colliding storms of economic limitations, politics, and the social impact of a generational change in leadership values. Our core beliefs have been shaken. The next question is where to find dependable investments in uncertainty.

The news driven by money-center based media is money-centered. If you work in New York, Washington, or Charlotte, you and your neighbors are undergoing significant changes as traditional financial institutions are being remade or wiped out. The gap between Wall Street and Main Street is wider than ever. There are two Americas: one east of Hoboken and west of Oakland, and then the rest of us. Wall Street and Madison Avenue have tried to marginalize any investment that's not part of Wall Street, residential real estate in particular. Wall Street's misunderstanding has created an industry of misinformation about real estate and its value as an investment.

SELF-MANAGING RECESSION OBSESSION

Some of us refuse to take part. We believe in cycles and the optimism in America. No matter what happens this is a country of smart people who will flounder, and make and admit mistakes till we find what works economically. Time cures everything, particularly real estate values. News reports say that we have not reached market bottom. The numbers and experiences of our more aggressive readers and clients do not support the doom and gloom.

Now is a great time to buy at values few of us will see again.

THREE SIDES OF OUR MOUTHS

First, as a wise real estate investor you have the opportunity to manage your position for your audience and interests. Clarity is strength. There is profit in confusion.

Second, a recession is what you make of it. By all means, be a victim, but don't rain on our parade. If you are a seller who believes that you need to get out of the property at any price before losing your shirt, you are ripe for being taken advantage of. Panic and urgency for a seller can mean profit for a deliberate buyer.

Third, as a seller, the market in many neighborhoods is moving in a positive direction. Rushing to sell may not be the only, or best, option. Holding and renting could generate inflation-proof income, tax advantages, and an early return to appreciation. History has been kind to well-located and wisely leveraged residential real estate. Understand your role and objective and use the market mood to your advantage.

WHY BUY NOW?

Here are the reasons in a list of top ten answers from property expert Ashley Church:
  1. Presently, buyers have a wide choice of stock and very little competition.
  2. Building permits dropped 41 percent from 2008 to 2009, after a similar drop from 2007 to 2008. They are still falling. A shortage of well-located homes will start to show up. Along with new-builds, many of the homes banks are returning to the market (REOs) are located in less desirable far-burbs and exurbs.
  3. Resale prices are often less than replacement costs. This cannot last too much longer, as the market abhors this type of illogical financial vacuum. New homes will be more expensive because the time and cost of permits, construction material, and reactivating labor is higher than buying existing stock. It will take 12 to 18 months to correct once the builders return to the market.
  4. Foreclosures (at double the normal rates) create more demand for well-located, quality rentals. Rental demand for well-located properties is still strong and a recipe for a future appreciation, says Greg Dawson of GoRenter.com.
  5. Falling interest rates, down payment assistance, and first-time homebuyer incentives have made home ownership more affordable; the best it has been for a long time. Buyers and investors with a good credit history, a down payment, and a demonstrated ability to make mortgage payments consistently, are able to get FHA financing.
  6. The real estate market has not imploded. Prices are off an average of 10 percent to 1 percent from their highs in good central and near-burb neighborhoods. In some cases value has held steady in the face of negative media. Far-burbs, exurbs, locations that are overbuilt, have an onerous commute, or where owners were sold aggressive loan products, are being punished. Their underlying economics were based on fragile and unsustainable housing promotion. The national median house price was down last month. This is expected to level off and stay flat, beginning to rise in 2010 as the supply of foreclosures is worked through.
  7. Vendors are now very negotiable on price compared with this time a year ago. They are increasingly aware that they may need to leave some money in their property, in the form of vendor finance, if they want to sell to investor-buyers looking for positive cash flow properties.
  8. Positive cash flow property deals can again be found all over. Go to www.InvestorLoft.com for a shortlist of discounted, cash flow positive properties that meet you investment criteria.
  9. Prices will recover and property values will increase. The downturn is due to a lack of confidence rather than any change in the property market fundamentals.
  10. Real estate is still the best place for most people to invest their money. Property has doubled in value, on average, every seven to ten years for more than 70 years; there is nothing to suggest that will change.

    BONUS: Real estate is titled, real, can be leveraged with a mortgage, can be refinanced to take out profits tax free, can be depreciated, can earn income and be expensed, if held longer than 366 days and if you must sell, profits are taxed at capital gains tax rates currently at 1 percent.

    Show us another investment that delivers this level of investment, financial and tax efficiency!


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