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Hoard Your Money and Buy Property
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How to Build Wealth in Real Estate Investment
Real estate investment is one of common choices for building wealth for many reasons: 1) it provides stable return in long run because of the limited land on planet earth and growing population; 2) it is a market that every people have certain knowledge; 3) it allows investors to take advantage of deferred tax. When stock market is booming, the return from real estate investing looks modest. When ... Read real estate article
Bank Foreclosure Houses
The banks have no grave intention in keeping the foreclosure houses in their own hands. They naturally need something to fall back on. They have no use of the frozen asset so what they will basically incline with is to sell the properties as bank foreclosure houses. What is good news is that bank foreclosure houses are very much lowered in rates in comparison to the actual market value of the prop... Read real estate article
Hoard Your Money and Buy Property
If you have money saved up through stock investing or some other medium, you may be looking at a tremendous opportunity in the real estate market in 2007.
For many prudent people, an obvious bit of their financial planning is hoarding money for certain events. The first is to simply have a "rainy day" fund for those times when life jumps up and bites you in an expensive way. For most, it is also all about saving your beans for when you retire. While these are the two standards, you might want to include a third reason on your list and start hoarding even more money.
2007 is going to be an interesting year in the real estate market. Most feel it will be one of those years where we will see a market that is essentially flat. Some markets around the country will see slight appreciation gains while others will see slight depreciation rates. Given this prediction, why would I be suggesting there are going to be a lot of opportunities in the real estate market? Three words explain it all - mortgage loan defaults.
To call the recent sellers' real estate market hot is a bit of an understatement. It wasn't hot, it was torrid. We are talking surface of the sun kind of hot. This put purchasers in a bad position during this period. Simply put, they had to pursue "interesting and unique" financing to afford the purchase of a new home. Many of these buyers are going to be regretting their choice in 2007.
The recent hot real estate market was supported by buyers using hybrid and balloon loans for financing. With historically low interest rates and massive annual appreciation rates, it seemed like a no brainer for buyers. The problem, of course, is things change. Interest rates have gone up and should continue to do so. Appreciation is now flat, if not regressing. In practical terms, this means the buyers now are seeing increased monthly payments on a home in which they have either reduce or no equity.
This represents a disaster and the foreclosure market is starting to heat up as we speak. In 2007, the bill is going to come due for many hybrid loans and buyers will be between a rock and hard place when trying to deal with the new reality. This represents opportunity for those that are liquid at this time.
Simply put, hoard your money and start looking for steals. By the summer of 2007, your only difficulty will be figuring out which one to pick from a very large selection. Since the market should turn around in 2008, it is an opportunity to make a nice tidy profit. If you doubt this scenario, just start watching the paper as prices start dropping.
Raynor James is with FSBO America - save money when selling and buying with FSBO homes for sale by owner.
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Watch Real Estate Prices When Buying From Builders
If you are looking to buy in the residential real estate market these days, you are a lucky person indeed. Everything is in your favor, particularly if you are buying a new home from a builder who has excess inventory.
Real estate developers are a highly optimistic lot. Much like a certain movie cliche', they often believe that if you build it, buyers will come. This is particularly true for real estate developers that build residential developments. Regardless of trends in the market, they will build and build till they run out of money.
Despite the cooling off of the real estate market in 2006, developers continued along this path. Well, now the bill is coming due as they like to say. The inventory of new homes is massive. The pool of potential buyers for these homes is much smaller than it was. Do you see a problem for the builders in this scenario? You should!
If you are looking to enter the real estate market as a buyer, you just might want to focus on brand new homes built by developers. Right now, they are an absolute steal. The buyers have construction financing obligations they must meet, so they need to move properties. All those upgrades they wanted to charge you for before can now be had without paying one red penny. Simply put, the leverage has switched from the builder to the buyer. That means you!
While you can get more for your money when dealing with builders these days, there is one area you need to be careful with when making a purchase. Builders are so desperate they will often sell you a price for a certain amount and then drastically lower prices on the same models two weeks later. If this occurs, you are going to be pretty miffed about your situation. There is a way, however, to avoid this problem.
The key is to demand that a cancellation or matching clause be put into your purchase agreement. A cancellation clause lets you back out of the contract before a certain point in the transaction if you want or, in this case, if the builder drops prices. A match clause requires the builder to lower your price to match any price reductions offered on other homes before you close escrow. Either way, you gain more protection from being in a situation where you pay more than others are.
Is this a fail safe approach? No, but it is the best you can hope for. If you close escrow and the builder then drops prices a month later, you are just going to have to live with it.
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