The Sub-Prime Mortgage Lending crisis has changed the face and landscape 0f the Real Estate market for much of the foreseeable future. Foreclosures have risen to an all-time high, reaching roughly 50% of homes.
The Flippers are now flopping. Gone is the day of no money down and quick reselling of properties.
So does all of this "doom and gloom" mean an end to the profitability of Real Estate? By no means. That is such a foolish notion. What we have experienced is merely a correction in the market. The market was saturated with overinflated prices. This allowed for poor investment methods. Now the prices are normalizing.
I have dabbled in single family home residential properties. That is, by the grace of God given the current circumstances, not my expertise.
My focus in on Multifamily Residential and Commercial Properties. This means duplexes, triplexes, quadraplexes, and pretty much any # of units beyond this. This is a great method because I do not deal in speculation, which means that I don't buy property based on the predicted future value.
I base all of my real estate investment decisions based on the cash-on-cash return, meaning if I put in $50,000 and can find a property that will give me back 25% per year, then that shows me its value.
This is the best time to invest in Multifamily property. People are losing their homes and need a place to live. You can rent them your apartments. The more units the better. In case you have one unit empty and own 10 units, its only 10% of your income. If you have one unit empty with your single family house, you lose 100% of your income. The numbers just work better. What a beautiful thing.
I will post more specific data come some time soon.
Sunday, October 19, 2008
Cashing in on the Crisis
We have all heard about the financial crisis that is currently plaguing our country and even our entire world.
It is a pretty bad ordeal, there is no question to that. But is it really all that bad?
I submit that, even though those who have invested in the stock markets may have temporarily lost much and even most of their investment, there are still many avenues of increasing your profit.
First of all the government has decided to aid the country by giving out loans. True, the majority of the bailout package they threw together is going to big corporate businesses like banks, insurance companies, and investment firms to increase their cash liquidity, but there is a trickle down effect.
There are many small banks that did not trust in the toxic assets that many of the big players did and thusly did not feel the major fallout caused by Real Estate Market crash and asset failures. Banks are in the business of making money by giving out loans.
My point: Now is the perfect time to start a small business. I recall a certain article from Inc. Magazine that I read awhile back. Gary Erickson, founder of Clif Bar, started up his company in the time of a recession. There is a certain mentality involved in business during certain economic times, be it boom or bust.
The mentality during a time of economic prosperity is smugness and comfortability. Entrepreneurs and other business people are much less likely to take risks because if whatever they are doing works then there is no need for much change and thusly no need for undesired risk.
In contrast, the mentality during a scary economic situation such as in a recession, demands need for innovation. If you are a budding entrepreneur, now is the time to get started. I can say this with conviction since my newest company is expected to launch in the next few weeks. No problem there. If you need a loan, speak with your local community bank or credit union. They are looking for promising leads. Business people during this time are more likely to take risk because, fundamentally, they are worried about failure. They need to find some ways to improve their business. Find a market that has this need and take advantage!
You just need to play it smart. If you are unsure or whether or not you have what it takes to run your own business or take the risk of the entrepreneur, then you most likely aren't ready. It takes confidence in your business to handle the highs and the lows. It is not for the faint of heart.
I urge each and everyone of you to assess your skills and abilities and determine if you have what it takes to make your success in this market.
Check in often as I will soon address how to be successful in the Real Estate Market, Entrepreneurial Leadership, and Financial Management.
It is a pretty bad ordeal, there is no question to that. But is it really all that bad?
I submit that, even though those who have invested in the stock markets may have temporarily lost much and even most of their investment, there are still many avenues of increasing your profit.
First of all the government has decided to aid the country by giving out loans. True, the majority of the bailout package they threw together is going to big corporate businesses like banks, insurance companies, and investment firms to increase their cash liquidity, but there is a trickle down effect.
There are many small banks that did not trust in the toxic assets that many of the big players did and thusly did not feel the major fallout caused by Real Estate Market crash and asset failures. Banks are in the business of making money by giving out loans.
My point: Now is the perfect time to start a small business. I recall a certain article from Inc. Magazine that I read awhile back. Gary Erickson, founder of Clif Bar, started up his company in the time of a recession. There is a certain mentality involved in business during certain economic times, be it boom or bust.
The mentality during a time of economic prosperity is smugness and comfortability. Entrepreneurs and other business people are much less likely to take risks because if whatever they are doing works then there is no need for much change and thusly no need for undesired risk.
In contrast, the mentality during a scary economic situation such as in a recession, demands need for innovation. If you are a budding entrepreneur, now is the time to get started. I can say this with conviction since my newest company is expected to launch in the next few weeks. No problem there. If you need a loan, speak with your local community bank or credit union. They are looking for promising leads. Business people during this time are more likely to take risk because, fundamentally, they are worried about failure. They need to find some ways to improve their business. Find a market that has this need and take advantage!
You just need to play it smart. If you are unsure or whether or not you have what it takes to run your own business or take the risk of the entrepreneur, then you most likely aren't ready. It takes confidence in your business to handle the highs and the lows. It is not for the faint of heart.
I urge each and everyone of you to assess your skills and abilities and determine if you have what it takes to make your success in this market.
Check in often as I will soon address how to be successful in the Real Estate Market, Entrepreneurial Leadership, and Financial Management.
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