Are You Missing The Boat?
Refinance, Buy Up, Invest
Is now the right time?
Any news you’ve heard regarding real estate over the past couple of years has probably been bad news. Prices are down, sales are down, and foreclosures are on the rise. Things are looking bleak, and no end seems to be in sight. This dreary news seems to be a constant drum beat, and the entire media seems to be on the bandwagon. As a real estate professional, I’d be very afraid…if I hadn’t seen it all before.
In my experience, the news regarding real estate is always the darkest, OR for that matter the brightest just before things swing in the opposite direction. Think about that for a minute…it was only 4 or 5 years ago when the media was telling us all how great the real estate market was performing, setting sales records and new highs in prices almost every month. Everyone seemed to have real estate on their minds, and the talk at every neighborhood party was about how much the house down the street just sold for. It seemed like everyone wanted to buy a second home in Florida or a fixer locally so they could “flip” it and make a killing. Those who dove into the market when the media was beating the drum the loudest have gotten hit pretty hard over the past couple of years, but there is a group of people that are sitting pretty, even after the recent declines. That’s the group who bought back in the 90’s, the last time the media was telling us all how bad the market conditions were!
There are some basic laws of economics that are fundamental in nature, and are not affected by short lived trends. Chief among those laws is the premise of “Buy Low, Sell High”. The current market is offering some great opportunities…the question is, how can you take advantage of these opportunities?
1- REFINANCE
As this letter is written, rates on a 15 year fixed rate loan are UNDER 4%! I recently refinanced one of my rental properties that had a 6.5% interest rate and 27 years left to pay. I was able to keep the same monthly payment and lop 7 years off of the loan! That will equate to a savings of almost $110,000…a no brainer!
2- BUY UP
High unemployment rates and the lack of consumer confidence they engender are at the root of our economic woes. Is your job secure? If the answer is yes, it’s time to parlay your good fortune. There are GREAT deals out there on “move up” properties. Houses that were in the in the $450-$650 range a couple of years ago have been the hardest hit group in our area. If your longer term plans include a move up to a bigger or fancier home, NOW is the time to be looking. Homes in the $250k to $350k range have lost some value, but not as much as the next level up. There’s a great inventory of existing homes to choose from, builder’s are dealing and remember, your new mortgage will likely be at a lower rate than your current mortgage.
3- INVEST
What has your stock portfolio returned to you over the past decade? What kind of return can you get in bonds or CD’s these days? I’m a strong believer that no investment portfolio is complete without holdings in Real Estate. Properties offering double digit cash on cash returns are coming on the market almost every day. Not all of them are a great deal… you need to be selective and consider your own personal situation. I believe you should own properties that forego the highest cash flow but in return are easier to manage and maintain. In the long run, I feel they will provide the best value.
I feel strongly that we are in a time of opportunity. If you agree, give me a call so we can figure out the best way for you to take advantage of that opportunity.
