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Personal Real Estate Investor Magazine
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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:
- Presently, buyers have a wide
choice of stock and very little competition.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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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