List Categories | List All Articles | List Articles By Title
Back To The Future - Big Changes Are Coming, Get Ready Now
The comments below are quoted from a recent speech by Ben Bernanke, a member of the Federal Reserve Board of Governors...
"Looking forward, I am sure that the Committee will continue to watch the oil situation carefully. However, future monetary-policy choices will not be closely linked to the behavior of oil prices per se. Rather, they will depend on what the incoming data, taken as a whole, say about prospects for inflation and the strength of the expansion. Generally, I expect those data to suggest that the removal of policy accommodation can proceed at a 'measured' pace. However, as always, the actual course of policy will depend on the evidence, including, of course, what we learn about how oil prices are affecting the economy."
In short, the Federal Reserve knows that there will be an impact. But no one knows how big and how fast. During the oil embargo of the 1970's gasoline prices doubled several times over a matter of months. The effect was dramatic and sudden. It was difficult to adjust, because things were happening so fast.
This time around, it appears that the price climb will be gradual and steady, thus allowing the Federal Reserve and the government to make adjustments as they go, by examining economic data on a monthly basis. At least that is what they are hoping for. They know that the economic climate is changing, but they are hoping that it will be slow enough to control.
This week as I contemplated my own reaction to the changing economic environment, I felt compelled to encourage you to give some serious consideration to your personal economic circumstances. If you have a large percentage of debt relative to your income, you should take steps now to eliminate as much of it as possible. Prepare yourself so that you will be protected against unexpected economic upheaval.
Being debt free, or having a very low debt to income ratio is the best way to protect yourself in an unpredictable and volatile world. As we learned on September 11, 2001 things can change dramatically in only a few hours. If you put it off, you may not have enough time to get it done.
The average person needs 4 to 5 years to pay off their outstanding personal debt, not counting their home. In today's world, it will pay to get started now. I have made it my primary objective to pay off my personal debt over the next year or two.
If you currently own rental properties, be sure you have cash reserves for future emergencies.
But how might all this economic stuff affect real estate investing?
The interesting thing about real estate investing is that even bad economic conditions tend to have a silver lining. There is a cause and effect relationship at work in any given economy, whether it is considered a "bad" or "good" economy.
In good times, such as we've had the past 8 years, retailing or flipping for cash was the hot ticket, due to high demand for housing and the ability to sell properties quickly. In recessionary times, higher interest rates and lower housing sales fuel more seller financing, and rental properties flourish. Of course there are always exceptions to the rule, but generally speaking this is the case.
As interest rates got lower, rates of return for traditional investment vehicles went lower and lower. The result? More and more money poured into real estate lending. Hard money and other types of conventional real estate financing programs expanded drastically, making millions of dollars in new funds available for real estate investors.
As housing sales reached record levels, home sellers began seeing a boom in housing prices. It has truly been a sellers market since rates fell below 7%. What happened to investment property? During the past 5 years of an investing bonanza in Atlanta,GA prices for investment properties have doubled and even tripled. 3 bedroom 1 bath junkers were selling in 1999 for as little as $25,000, even in liveable condition. Today, that same type house regularly sells for $65,000 (or more) before repairs.
Rising rates will have a positive effect for investors, by slowing housing sales even further. As sellers get fewer solid offers property prices will get softer. Rising rates could fuel more short selling of foreclosed properties, and this trend is likely developing now.
Foreclosures may eventually get to levels not seen since the late 1980's, due to high levels of mortgage debt among homeowners, who in many cases, have mortgaged all of their equity to pay other bills.
If rates get above 7%, you can dust off your creative financing books, as seller financing will increase. Rising rates mean rising monthly payments. This will eliminate the borderline buyers from the housing market. They will start moving back into apartments and rental houses. Vacancies will decline, rental rates will increase.
If rental rates increase, cash flows will increase. Rental property will be back in style with investors who abandoned rentals and focused on selling for fast cash in a hot market.
Companies that sell investment property can expect growing demand for rental grade properties. While it is still very early in the cycle, I believe this shift is already under way.
Economic recessions are boom times for smart investors who are positioned to take advantage of the situation. I am not predicting a recession per se' but rising oil prices and interest rates will eventually have a big effect on housing.
Be ready to take advantage when the opportunity comes. You have plenty of time to plan for it now.
Donna Robinson is a real estate investor, author and consultant in Atlanta, GA. More of her articles are available on her website at http://www.RealEstateInvestorHelp.com She may be reached via email at firstname.lastname@example.org
Questions You Always Wanted To Ask A Master Builder But Never Had The Chance
Building a house (or lots of them) seems to be an area of knowledge that is kept secret (insiders only), with clients kept in the dark and fed on expensive "cow dung."A while ago I asked my US readers of my e-book, "Residential Development Made Easy" for questions they would like to ask a Master Builder.
How to Sell Your House by Lease Options
Many people buy a house then have to move within a few years, due to divorce, relocation or financial difficulties. Without any equity though, it can be nearly impossible to find buyers and you still have realtor fees to contend with.
Best Time to Buy? Best Time to Sell?
When is the best time to buy? When is the best time to sell? I get asked these questions constantly everywhere I go. In short, the answer is that it depends on your individual circumstances.
Top 7 Reasons Why FSBOs Fail To Sell Their Home On Their Own!
In the United States, less than 10% of all For Sale by Owners (FSBOs), are successful in selling their home by themselves. That*s because most people just give up because they don*t realize from the beginning the difficulty and complexity of the job ahead.
Forclosure And The Durrett Rule
It's probably happened to you..
Selling Houses Fast: Basics of Design & Color Psychology
Fixing up houses to ready them for sale includes a design plan for needed changes. Save money on transformation costs by choosing design details right the first time.
Dubai or not to Buy? A Short Assessment of the Dubai Property Market
Never has there been such an ambitious and creative drive to establish a property market as has been witnessed in Dubai over the past three years. Running short on oil reserves, Dubai's crown prince, Sheikh Mohammed Al Marktoum, set out to turn Dubai into the financial, commercial and tourism capital of the Middle East and in the space of three years he has more than succeeded.
Make Your House Earn Its Keep
Did you realise that there is a lot you can do get an income from what is probably your most valuable asset? Not only is your property a great (long-term) investment, your home could also bring you an income while you are still living in it. Here are some ideas to make your property really earn its keep.
Old House? New House? Weighing Your Options
Maybe it has something to do with a childhood home we fondly remember. Many of us long for old homes built with solid construction, quality craftsmanship and beautiful details.
The Real Estate Bubble Fallacy
There has been a lot of talk lately about the "Real Estate Bubble", and a lot of folks are asking the question: "When it is going to burst"?They are saying that the market just can't sustain this level of growth and appreciation much longer, and I heat them say that it is inevitable that it must come crashing down soon. People are worried.
Property Types A, B, C And D
One of the biggest problems individuals just starting out have is the type of property they look for, and working outside their immediate area. One of the constants around the country and for every state, is that there are the most desirable areas to live and the least desirable; and then those that fall in between.
Investing in the Baltic Tiger: What Has Estonia Got to Offer?
Estonia's reputation is growing within the property investment market. Rising far above her new European neighbours in terms of infrastructure and growth, Estonia is fast becoming the Baltic's very own 'Tiger' economy with a healthy growth rate of 5.
Donald Trump on Real Estate
I love what Trump says about the business of real estate.I am a big believer in setting up business systems for all my clients.
For Sale By Owner Listings
Selling your home on your own, without a Realtor, is becoming less and less popular. This is surprising, considering that home values have skyrocketed and commissions have risen along with them.
Selling Houses: Cutting Edge Design Tips for Selling
In this article, you're going to discover new techniques for marketing houses, and you'll find that these fresh, new interior design ideas will help sell your home faster, and for a higher price than the competition!Buyers' physical senses respond to a home's design, and what a buyer feels is based upon their psychological reactions to sight, hearing, smell, touch, and even taste. Design Psychology employs new strategies in interior design to entice buyers.
NAHB's Voluntary Model Green Home Building Guidelines
The voluntary Model Green Home Building Guidelines are designed to move environmentally friendly home building concepts further into the mainstream marketplace. Currently, there are approximately thirty communities throughout the U.
The Secret Jewel in the Mediterranean Crown
Since the Northern Cypriots famously voted 'yes' to the UN backed Annan plan for the peaceful reunification of Cyprus in 2004 the world has awoken to the secret and hidden beauty of this untouched jewel in the Mediterranean crown. Those open-minded and individual thinkers seeking elegant living, unrivalled Mediterranean-region investment property opportunities or their own hideaway are today embracing Northern Cyprus.
Just Give Me Eleven Reasons to Buy in Dubai
Buying overseas property is not always for the fainthearted but we think Dubai is an exception to this. Here are eleven reasons to buy in Dubai:1.
Rehab Your Way to Wealth: The Quick Way to Fixer-Upper Success
Completely rebuilding a house is not necessary to make money in investment real estate. Most times, if you have bought smart, you won't have to make a huge improvements on your investment property.
The Cat in the Attic
Strange and unexpected things happen during home inspections. Seldom are they tragic.
home | site map
All articles are copyright to their owners.
Note: this website lists articles, We do not Write Articles !