Two days ago I blogged about the 4 Horseman of the Real Estate Apocalypse which was Jobs, Inventory, Foreclosure Rate, and Affordability. Oklahoma City is rated as the lowest unemployment for cities over 1 million population, has a foreclosure sale rate of 4% of sales in 2008, absorption rates of 6 months or less where we sell investments, and is rated as the most affordable city to live in in 2009.
This adds up to stable investment territory. I bought my personal house in 2005, the height of the real estate frenzy so I paid top dollar. Instead of taking a discount as a Realtor, I bought at list price and added items like wood floors and other upgrades. In March I close on the sale of this home with a profit. That is not something you can do in most markets right now, and the home was priced in a bracket where inventory is just above six months. This is an illustration of what is happening here.
We need to invest in something. Ask yourself what you trust in? Bernie Madoff sent out false statements for the last 13 years, Wall Street is hitting new lows, and some banks gave high CD rates of return but not F.D.I.C insured. Bricks and mortar looks pretty good right now. You can go hug it and it feels real. If you do your homework and invest in markets like Oklahoma and Texas, you get positive cash flow, a depreciation that is larger than the income which means no taxes on that income. The taxes are deferred, and can be extended to death with 1031 tax deferred exchanges. Rates of return after tax are double digits for the holding period, and if you buy a short sale with us, then you also get equity. That equity is predicted to hold firm in 2009 which I believe will be the worst year we face in home values.
We don't expect you to take us for our word only. Every property we sell has a detailed analysis of the internal rate of return, and our property manager which is the best I have ever seen, will give you a rental history of the neighborhoods, and the cities which is broken down by days on market, and what room complement and area is best. We currently have 30 short sales to choose from, new home construction that rents well, converted apartments into low cost condos, new condo projects close to Oklahoma University, and commercial office condos. When you see the analysis and realize that a conservative investment you can believe in gives you an 18% annualized after tax return you know you found a haven for your money. It beats putting it under the mattress.