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Informative Articles

A Singles Game of Real Estate
This discussion leans toward answering questions asked most often by our youthful men and women in there early twenties. They often begin to ask themselves the question, “Should I consider buying a home, condo/town-home or some other type of...

Flat Fee MLS Listings - Is this the future of real estate
Realtors are all a buzz about this new form of listing houses on the MLS (multiple listing service). Some feel it creates more work for the buyers agent, while others see this as a way to tap into the For Sale By Owner market. It use to be...

How I Became a Real Estate Investor
Recently I closed on the sale of two homes. They were located about a mile apart and had comparable market values. However, beyond these two similarities, the two deals were very different from each other. Let me discuss in more detail the...

Real Estate Marketing Online -- The Power of Headlines
Real estate marketing online is about getting people to stop when they visit your website. Then you must get them to follow a desired path through the site. This path leads to your ultimate goal, which involves the reader contacting you...

Take Away Power For Real Estate Investing
As a real estate entrepreneur, you must decide to learn the secret power associated with the takeaway. Maybe, you've already used it before. You may have used it and didn't even know it. Regardless, this method is a powerful trigger that will...

 
Cash is King as Real Estate Crashes!

True real estate investors have not had an easy time in the past few years as the field has been inundated with speculators chasing artificially bloated prices.

Hoping to be able to sell at a higher price is not investing, it is speculating.

Investing is buying at a price that will not only carry the property, but will also return a profit to the investor, without appreciation.

Home prices skyrocketed as the Fed dropped interest rates and bankers flooded the real estate market with cheap, easy money. Investors were priced out.

Interest rates giveth and interest rates taketh away!

Already inventories of unsold houses are increasing. Properties are taking longer to sell in many formerly hot areas. Appreciation is way down and in some areas prices are dropping.

Of course "real estate professionals;" read realtors and mortgage bankers, say don't worry about it.

Investors who have been through these boom and bust cycles before know differently. Speculators who were pouring money into properties while waiting for a bigger fool to buy at higher prices will run out of money.

Many home owners barely squeezed into properties they couldn't afford. They gambled with mortgages that in some cases, unbelievably; increased the amount of money owed with each payment!

They will walk away from their homes as declining prices put them "upside down," owing more than the house is worth.

Stocks of home builders are already down by 20-40%, an indication of their future fortunes. Reluctant to drop prices, they are offering all kinds of incentives to new home buyers. They are even ready to sell to investors again.

We spoke to one homebuyer who bought a new home in Las Vegas in 2004, planning to relocate from California. When their plans unavoidably changed they figured that they could still make a nice profit by selling the home.

They were shocked to find the home builder was now selling new homes for less than they paid for theirs a year earlier.

Exploding foreclosures, now running at or near record rates, will put downward pressure on whole neighborhoods. It is estimated that one foreclosure in an area can depress prices on surrounding properties as much as 16%.

Eventually, these foreclosures will show up as REO's; bank owned properties, as no takers emerge at the foreclosure auctions.

There are few sellers as motivated to get rid of properties as banks. Beside the cost to take properties back, carry the expense and liabilities of owning the properties, banks receive demerits from regulators for "non-performing assets" on their books.

These defaulted mortgages decrease the banks reserves, thereby reducing the amount of money they can lend and can even result in the bank being shut down as were hundreds of Savings and Loans in the 80's. In a real estate down turn in 1975, a bank in Newport, RI "Gave" my partner and me 2 bank owned homes for the cost of the mortgages, plus they threw in money for renovation!

Another investor I know, bought $2 million in mortgages on a strip of properties in downtown Brooklyn from a bank for $400,000 in the real estate bust of the late 80's.

Investors, get your cash ready, there will be real estate bargains galore in the next few years!

One place you may overlook for cash is your retirement account.

The banks and brokerage firms have done a great job in keeping this secret from you.

The reason? They do not make money when you take your money out of your IRA's, 401(k)'s and 403(b)'s to buy real estate.

However, it is possible to invest your retirement money in real estate and reap tax free profits! (see http://IRS.gov Publication 590)

Check to see if your present custodian will allow you to invest your IRA or retirement funds in real estate. If not, find one who will.

Remember, in the coming real estate market, cash will be king!



About the author:

Copyright 2006 Bill Young. Bill is a former bank mortgage officer and licensed financial consultant. He is a personal wealth consultant, real estate investor, speaker and author. If you'd like information on investing your retirement funds in real estate, visit his website at: http://IRAInvestorsExchange.com If you know of someone facing foreclosure, Bill is offering a free, 5 part Stop Foreclosure Course: http://301url.com/StopForeclosures


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