Real Estate: Are You Thinking About Making A Fortune? (Some Advise From Someone Who’s Been There)

I have made fortunes, and lost fortunes in real estate.
Let me share with you what I think will happen next. We are at or very near the bottom of the market trend. Regardless of what is happening in other places in the world, we are about to see prices start an upward climb.
The constant increase in population and in family formation means we need more housing. People have to live somewhere. There is one earth, and one America. The world wants in. They will want to live in your rental properties, if you have them. Here’s how I suggest you take advantage of it.
Advantage One:
Please realize that in many market areas, when you’re looking at an REO (“Real Estate Owned” – a bank term for what the banks don’t want, a foreclosed property), you’re often looking at a house or commercial building that is priced well below what it would cost just to reconstruct the building, not considering land cost. You must appreciate what a deal that is for you!
An Example of the great value in these bank-owned properties, is a home I recently sold for $86,000 cash. The insurance requirement for this house was $300,000. That’s the amount the insurance company estimated it would cost to rebuild if it were to burn down.
That’s why I always tell my clients not to worry about paying to much for a home. Maybe you will pay a few thousand more than it is listed for. Don’t worry. These homes are so far below replacement, you are the big winner when you get the winning bid. In my market area (the High Desert of Southern California) bank-owned homes will get multiple cash offers. Be prepared to pay a little more than they are listed for, if you’re looking to buy here.
Advantage Two:
We are in a lending climate of historic low interest rates. We are very likely to not see interest this low again, for many decades. I sold homes in the 1980s when interest rates were 18 to 21%. Now, we’re below 4%. Money is cheap to borrow now, but at some point interest rates must rise.
Advantage Property Investment Company Three:
The rental market is robust. Many families have joined other families to rent one property because of tough economic times. Some have left a home to foreclosure, and must now rent. The younger generation can’t find a job that would allow them to buy, so they are renting for now. In my valley, like many valleys across the USA, rents are higher than the cost to borrow, which can provide the landlord with a positive cash flow.
Don’t think that a $300 or $400 positive cash flow from a rental is peanuts. It may not seem like much compared to the quick flip profits of the recent real Holland Homes Floor Plans estate boom. However, $400 a month is a lot when you think about what your bank would want you to have on deposit to earn that much interest each month.

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