It's a Crazy Market...What's Next? Regardless...Take Action!

By
Real Estate Broker/Owner with Team Orshoff - All things Riverside Real Estate

It’s pretty crazy how in the last 3 weeks the following has taken place:

• Fannie Mae & Freddie Mac were seized by the government
• Leman Brothers files for bankruptcy
• Bank of America bails out Merrill Lynch before they have to file for bankruptcy
• AIG bailout by the Federal Reserve in the amount of a $85 billion loan
• President Bush seeks a $700 billion Bailout and it fails to pass
• Goldman Sachs & Morgan Stanley turn into regulated commercial banks
• Warren Buffet buys $5 billion of Goldman Sachs stock
• Washington Mutual is seized by the government & sold to JP Morgan Chase
• Wachovia is bailed out and purchased by Citigroup

The next question is, what’s next?

Monday showed a 777 loss in the Stock Market...Tuesday showed over a 400 point gain back...will the adjusted $700 Billion "Bailout Plan" (or better termed and Economic Stabilization
Plan) pass this week now that some changes have been made to gain bipartisan support?

What does this all mean to the average homeowner?  In the midst of this country wide "crisis", remember that most banks are doing just fine. Most people are paying their mortgages on time. Most of your neighborhood will go on in the days to come like they always have. And everyone in every neighborhood needs a place to call home.

Some people say that any government "bailout" will lead to more people walking away from their homes.  Bruce Norris, a well renowned real estate investor and California market statistician (and one of my personal mentors), has numbers and a viewpoint (of which I agree) that basically states that homeowners who are paying their mortgage on time every month, who are just as upside down as their defaulting neighbors, will be more apt to default themselves if they can get access to government funds or loans to cut their mortgage in half.

Furthermore, if they are not eligible for government assistance because they actually qualified for a real loan with their real financial picture, rather than an adjustable "liars" loan at 100% financing, they might just walk away from their upside down home throwing their hands up in disgust at what is happening next door.

I believe that anything the government does, while it may help the problem, will only prolong the market recovery.  This "bailout" plan will eventually be profitable for the government (read this) it will take years for the effects to be realized.  What do we do in the meantime?

The short answer:  INVEST IN REAL ESTATE!

It will not be the government who will make the biggest dent in this crisis.  It will be the real estate investor.  It will be the savvy investor.  It will be the novice investor.  It will the be the entrepreneur who will look at the opportunities to not only make money, but put people back in to homes and home ownership who are already coming out of the woodwork bringing their cash and business savvy to create solutions.

I am doing it.  Many of my clients and listeners of The Home Ownership Roundtable are doing it.  I am even pooling funds from friends, family and associates to leverage our smaller individual dollars in to larger collective powerful bucks to buy more and provide profits to all.

Yes, this is a pretty crazy time right now...scary, even for me, and I know for you...but do not let your fear prevent you from taking action!  This is the time to do it! 

If you would like to talk about what action is right for your fee free to contact me through this site or via email at darren@971roundtable.com.  I look forward to hearing about the action you are taking, want to take, or if you want to take some action with me!

Here's to investing!  (perhaps even together!!!)

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Rainmaker
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Ann-Marie Clements
Dubai International School, UAE - Saint John, NB
M.S. Ed., Innovative Proactive Principal

I think there are many bargains, especially Las Vegas, some parts of Florida and many parts of California...  If you are buying a first house, try to buy the biggest bang for the buck and in the best neighbor (that is fairly stable or currently working).  Then sit and wait for your investment or nest egg to grow.  Nows not the time to buy to flip because the economy needs to pick itself back up first.

                                ;>)

Oct 01, 2008 11:51 AM #1
Rainer
26,590
Darren Orshoff
Team Orshoff - All things Riverside Real Estate - Riverside, CA
The Key To Your Home™

Whoa Ann-Marie...Vegas and Florida?  I still think those areas have a while before there are REALLY good deals.  You did say parts of Florida, so I will give you the fact that there are always deals around if you can find them.  The Inland Empire in California is where I am getting the most smokin deals! 

That being said there are 3 simple rules to investing...follow them and you will always succeed.

1. Buy with equity (under current value) or with a significant cash position at close.

2. Stay positive while holding.  This is the most important and must include mortgage, taxes, insurance, and a vacancy factor.  If you are positive...it does not matter what the market does around you.

3. Have an exit strategy before buying, even if your strategy includes a long term hold.  You plan to fail if you fail to plan.

 

Oct 01, 2008 06:33 PM #2
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Rainer
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Darren Orshoff

The Key To Your Home™
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