Wealth Tactic 15
(by Ed Barriskill, co-founder 37th Parallel Properties)
I was inspired to write this article after a friend and investor of ours, Rhonda Hargrove, emailed me and told me that as much as she has enjoyed reading the Wealth Tips and Blogs, she felt investors needed encouragement and motivation to stay in the real estate market, even during these recessionary (bad) times.
I believe we are just going through another market cycle, and while this one is quite severe, it is just still another market cycle. My wife saw many signs that this down market was on its way, as she was selling new homes (she was a Senior Project Manager in a new housing development here in Brentwood). She was aware that many buyers she was working with couldn’t afford these homes, but the lenders somehow made them look like they qualified; and the rest is history.
As a real estate broker for 34 years, I have now lived through four “bad markets” and this one has been the worst. For those investors who are younger or middle aged and just starting out in this investment game, it seems like the market will never come back as some or all of your investments are not yielding the Rate of Return (ROI) you were told or promised. Some investors have lost some or all their money in projects they’ve invested in.
History shows us every real estate market goes through this cycle every 12 to 15 years, so it is not a surprise to me this is happening. In my experience each time the market has gone down, it takes approximately three to five years for the market to recover. Once properties start appreciating again, their values reach even higher than in the previous cycle.
For our current market to recover we need to see employment rise. To make this happen we will probably see the government step in (just like past markets) and create jobs for businesses and make new incentives for home buyers to purchase houses again. I haven’t seen it yet, but I believe we will see more 40 year and maybe some 50 year home loans to allow the housing market to begin moving in a positive direction.
We are still at the bottom of the market, but as time passes I believe that history will repeat itself and the market will recover. We will see the market value of single family houses increase higher than before – it will just take time. In1990, when we were going through a similar real estate down market, many millionaires made their fortunes by purchasing properties during recessionary times. In fact during the early 90’s Robert Kiyosaki, a well know investor and teacher, made most of his wealth.
Depending on what your financial goals are; building cash flow or equity growth or both, 37th Parallel Properties believes that today is an excellent time to invest. It seems that single family houses are now at their lowest price point and there are many good deals out there. If you decide to be a passive investor, 37th Parallel Properties has some great multi-family apartment building projects that are very safe, stable, secure investments, these properties spill off good steady cash flow month after month and provide good equity growth.
For the investor who is sitting on the fence and waiting to see what the real estate market is going to do, this could a big mistake because there are many good deals out there. My suggestion is to take advantage of the good, reliable investments that are out there right now making money. I am proud to say, even in these recessionary times, 37th Parallel Properties is making money for our investors.
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- Six Facts Why Apartment Investors Should Be Optimistic
- The Four Stages of A Real Estate Market Cycle
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