"The Best of Times - The Worst of Times", No Wonder I'm So Confused...!

What in the heck is going on around here??

Some real estate investors are running around screaming "the sky is falling! Time to jump back into stocks."
While others are beaming from ear to ear telling us we are entering the "golden era" of real estate investing. But for the most part, everyone seems to be dazed and confused.

Fear not my darling, it is neither the best of times or the worst of times, it simply is what everyone should have come to expect at this phase of a period of incredibly low interest rates followed by incessant interest rate hikes by the Federal Reserve.

And now is the time that many people are going to decide that "real estate is not for them" - GREAT!
Get the hell out now, and don't let the door knob hit you in the crease and cause permanent damage.

I'm sorry, we're not suppose to write things like this on the Internet. Please let me rephrase, "we are sad to see you go, good luck with your stock market, or oil futures, or your job, or what ever else you plan to do to be in a position to enjoy life and ultimately retire or send your kids to college". As for me and my folks, "We ain't going nowhere - cause its about to get really good as we switch from one game to a new one!"

So, let's talk about the real deal here. Bottom line is that from 2001 - 2004 the overall US economy really sucked wind. So to "pump up the jam", excuse me, to get the economy going, the Federal Reserve dropped the Federal Funds rate, which dropped short term interest rates (impacts businesses, and Adjustable Rate Mortgages). At the same time, the Chinese Government bought huge amounts of US Debt (in the form of Treasury notes and bills) which also caused a significant decrease in long-term interest rates (Impacts 30-year mortgages).

The result was, of course, a huge uptick in pricing and demand for single family houses and condos. "Why?" Come on, you know why. 90%-100% of the purchase of every house or condo purchased by a "traditional buyer" today is financed. The lower the interest rate, the more you can borrow. And despite the fancy lingo and computer models, the bottom line for both $1.0 million houses and mobile homes is what Lonnie Scruggs has told us for years: The average buyer simply wants to know: "How much down, how much per month", and pays no real attention to the "sticker-price".

So after two consecutive years of interest rate increases, we are, where we are suppose to be, and strategies for selling to first time home buyers, or the move up market, or condos, or for that matter buying then reselling real estate within a short period of time have to be re-exmined to see if they still make sense. In many cases they do not!

But don't leave just yet. There are 10-Fundamental ways to make money in real estate (actually 11, if you do business in Maryland), and they are not all tied to selling houses or condos.

Right now 3 of the 10 fundamental strategies are "sputtering". O.k., but what about the other 7...? "Hello", Dude/Dudettes These 7 other strategies perform "Best" when the market gets to looking like it looks right now.

So, if you want to take your ball and go home - go. Otherwise, now might be the time to put one ball and glove down, and pick up a different ball and a stick and stay on the field, cause a new game is about to start and its gonna be fun (and profitable) for the rest of us who stay.

p.s. - starting tomorrow I give you the decoder ring to figure out what the heck I'm talking about.

p.s.s. - If you should decide to walk away from real estate now because all you know is 30% of all there is to know, and that 30% is not doing as you had expected - what in the world are you going to invest your time and money in? Stocks, Bonds, Oil Futures, Teak Oil from Scandinavia?? Good luck. I hope that by the time you really figure that other thing out, that it too does not adjust and "throw you", and when you come back to real estate you have not lost too much ground.