Never has it been easier to make money in real estate than in 2008....that is until 2009 came along. The first part of 2009 will be different than the last part of 2009...much different. For the first few months of 2009 (4-6 months) the interest rates will be rock bottom. The government is trying to stimulate the economy by lowering interest rates. Here is the problem with that tactic. The lower the interest rates the higher inflation will run. To slow inflation down the interest rates have to rise. That rise will start sometime between April and July of 2009. What does that mean for you? That means you will need to lock in and refi all of your mortgages into 30 year fixed rates. If you decide to move any loans into a ARM make sure it is a 5 year ARM. When interst rates start to run (and they will) rates will be in the double digits by the end of 2010 (30 year fixed rates will be between 10%-14%) and they will stay there until the beginning of 2012 then they will begin to taper back down. When interest rates are high no one can afford to buy a house. For example, a $100,000 dollar house payment at 6% interest is about $600 per month. A $100,000 house payment at 12% is about $1050 per month! Do banks see all of this coming or do I have a crystal ball that nobody else has? The banks see all of this coming! The only reason I know this is because I study history and history always repeats itself. Since banks know what will happen they are going to do a couple of things. One is this, they need to control there losses as much as possible without going broke. To do that they want to sell all of their inventory (foreclosed homes) as quickly as possible. They are not going to give these houses away....at first. What they will do is put the houses up for sale at the recommended BPO (brokers price opinion) price but, if no offers come in they will slash prices, maybe by half, just to get them sold before the interest rates start to rise. Once interest rates start to rise these homes will not sell unless they are priced far below value. So knowing that, you will have competition many times if they slash the prices in half in one day. You will want to offer half price before they slash prices so you get the house before everyone else. I HAVE ALREADY STARTED TO SEE THIS HAPPEN IN MY AREA! And I live in an area where the economy is strong. Once you have the house, rent it out until the interest rates go way up. Once interest rates go way up, sell it as a lease option with interest rates slighty below the going rate. BUYERS WILL KNOCK DOWN YOUR DOOR TO BUY THESE PROPERTIES AS A LEASE OPTION! Example: You find a house that is worth $100,000 but you buy it at half price for $50,000. You lock in your rate at 6% interest. Your payment is $300 per month. You sell the house at value ($100,000) as a lease option at 10% interest. The new owners payment is $875 per month. Your positive cashflow difference is $575 per month! You will give your new buyer a rent credit of $175 per month. You will charge $5000 down as a non-refundable deposit to be applied toward the purchase price. You don't pay for management or repairs. The new owners pay the taxes. THEN 3 YEARS DOWN THE ROAD YOU GET A PAYDAY OF $40,000! YOU WANT ONE OF THESE PAYDAYS EVERY MONTH! To do that you want to buy a house every month in 2009. Imagine making $40,000 per month for a year in three years. And while you were waiting you were receiving $12,000 per month in cashflow and deposits! Wow! I skipped a lot of the small details but I think you get the point. That is the strategy for 2009. I will doing that along with holding a few as rentals. 2009 should be a great year! Get it done!
You've got to find your obstacles and call them out! Unsheath the sword, and do battle with whatever it is that holds you back!