18 Jun 2009 Second Half Market Outlook
Thanks for continuing to read my “No Sales Series of email articles”
I hope you enjoy that I am providing nothing but content.
Today I want to talk about what think is the market outlook for the second half of 2009.
Given the turmoil in the economy I don't dare to make predictions further out than 6 months.
I won't dive too much into the numbers. I let the newspapers do that.
What I want to cover is more of the psychology of the market.
And it seems like we might be at a point where the lower priced properties (Land and Homes) have bottomed out. After all if you can buy a 40 AC parcel for $5,000 which in many areas of the country (even rural areas) sold for $30,000 to $50,000 just two or Three years ago, then there is not much more space left for these properties to go down in value.
Or if you can, like I have been lately doing buying FREE AND CLEAR homes from individual owners or banks for as little as $28,000 to $41,000, in good shape which you can then rent for $900 to $1,000 a piece or sell with Seller Financing for $60,000 to $70,000 then these are numbers which just scream one thing loud and clear to me.
NOW is the time to buy!!!
Most of my students right now focus on the FEAR of selling. They ask me in droves “what if I can't sell the property” What if nobody shows up and is willing to buy this property from me”….
You all know these questions because they come up in your mind probably every day. (if they don't good for you)
But let's look at some scenarios
Let's take the houses first.
If you can buy a House for let's say $35,000 and even with a Hard money loan at 12%) you won't have a payment of more than $350.00 per month. Then you rent this house for $900.00 you have a $550.00/month Positive Cash flow (minus property taxes and Property insurance that is then still about $450). That is a positive cash flow (including vacancies of at least $5,000 per year. If you take these $5,000 per year and use it to pay down your mortgage you will have paid off your mortgage in 7 years.
If you only do this 2 times a year and do that for 5 years, (and I just bought 10 homes like that in the last 3 months) and keep paying down the mortgages with your positive cash flow each month you will within just a few years have 10 Free and Clear houses rented at $900 to $10,000 each or in short words about $90,000 to $100,000 per year in FREE and Spendable CASH income FOREVER.
These deals were just NOT available 2 years ago and I dare to make the prediction that they won't be available even in 1-2 years from now. Not at this price level. That's why I say NOW is the time to buy and not worry about sell.
Ever wondered how you can pay for your children's College Tuition?
Ever wondered how you can afford retirement?
Here is ONE solution.
We are in a Market Overcorrection and there are an incredible amount of deals available.
Plus the banks still don't lend and in my opinion won't for another 6-12 months (at least).
The reasons for that are to complex to describe here but with my 2 MBAs and years of business background I do think I have a good understanding of this.
Now let's look at the land business.
One thing that sets land apart from Homes is that most of the lower priced land out there ($5000 to $80,000 which is my specialty) is owned FREE and CLEAR with NO mortgage on it.
But unemployment is up right now and many people are looking for ways to raise additional cash. So they are selling what they own and a piece of land sounds just like the right thing to sell to raise a nice amount of cash.
Plus Right now, a lot of people look at land as something that they own but can't do much with. Nobody builds new houses, and therefore the builder's demand for new houses is low. But If you look at the statistics for the US they say that in 30 years we will be not the current 304 Million People but more like 360 Million people in the US.
That means these people need to live somewhere, and they will want to have second homes, places to get away, and places of their own where they can build a house or put up a mobile home and where the cost of living is lower, for when they retire.
That means that Demand for land MUST come up again.
Plus with all the money the Government has poured into the Economy, we are this year running a budget deficit of over 12% of GDP. This in simple terms MUST lead to inflation and rising interest rates in the future. So why not be in the position of making a profit from these higher interest rates when selling these properties with seller financing.
When you buy land now at Rock Bottom Prices using my techniques, you then can as soon as the market picks up again sell them in masses for higher prices AND on top of it you can if you sell them with Seller Financing. I believe you will soon be able to again ask for 14%, 15%, and even 17% or more interest when selling your properties with Seller Financing.
That doesn't mean you can't sell right now. Just last week I put up for sale on my webpage 20 properties and I sold 6 in only 3 days with only 1 email to my buyers list.
But what I am doing is I am keeping some key properties which I just plainly won't sell right now but which I am preparing to sell when the market comes back.
I hope you enjoy these little informational rants and I thank you for listening to me.
the Home of Jack Bosch, National
Expert in Tax Delinquent Property
Investing and in “Land for Pennies”
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