If I were young again, I would adjust some of my thinking and some of my ways and marry my girlfriend as soon as I could. Why? Because, speaking as an older and perhaps wiser man, it is very nice to go through life with someone you love and also respect. It is one of the joys available to all of us, that many of us fail to take advantage of while chasing the dreams that appeal mainly to the young. But I digress.
The second thing I would do, with my new wife, is look for a home that we could share. Now and then, a unique time appears and quickly disappears before we truly grasp the meaning. This is one of those times—time to be “young at heart” when it comes to real estate, meaning hopeful, ambitious and proactive. You can close your eyes and throw a dart and hit a house that can be bought, held and eventually sold for a profit. If you keep your eyes open before you throw the dart you probably can find a house that might just make you wealthy. Real estate is currently down in this country and either about to hit the bottom or already is on the way back. It is easy to detect. Just wait until you hear that it will be years before it comes back, if it ever does, and you then have verification that most will carry the message and a select few will ignore it and gain untold wealth.
But why real estate? Because you and your spouse can hold the property, most likely live in the house, and after 24 months of living in the house you might sell it for a profit of up to $500,000 and not owe a dime in taxes. That is the law. Will you get there in two years? It’s not really important. What if it takes five years or even seven years? It doesn’t matter when you get there as long as you eventually get there. And once “there,” I would sell he house and do it all over again. If you make the maximum on the first house and the same on the second, you will become a certified millionaire. Hopefully you will be in your 30’s or 40’s but it doesn’t mater if you are in your 60’s or 70’s. You will have achieved something that will help you all of you days.
Are there other ways of accumulating money tax-free? Absolutely, but probably none as easy as buying a house where you will live and raise a family. Now the big problem: convincing you that real estate is going to come back. Lucky for me it isn’t my problem, and if there is a problem it’s yours. Real estate will be back with a vengeance because people need places to live, investors need places to invest in for cash flow and capital gains, foreigners have huge discounts on our real estate because of the weak dollar, and real estate contributes directly and indirectly to over half of the jobs in our country. A vibrant real estate market is definitely in the nation’s best interest. In a few months the figures showing the average prices of the houses sold will begin to trend upward. Watch out for the rush to buy houses.
How can I predict the turnaround? It isn’t very difficult when you realize that somewhere between 14 and 18 months ago the credit crunch hit and jumbo home loans started to disappear. Today we still have a problem with loans between $729,750 and $1,250,000 (above that is “super jumbo” territory). The result: houses that could be bought with conforming loans sold easily; those that needed jumbos didn’t. When the powers-that-be announce each month the value of the homes that sold, they take the total number of homes that sold and multiply that number by the sales prices. Then they take the result and divide it by the number of houses that sold, and that is the value. If higher-price homes aren’t selling because of lack of suitable loans, it skews the average price results. When you look back a year, you can see why a year ago the prices were higher. Soon we will begin to compare current average prices against a time where jumbos were absent and voila, the large disparity will disappear. Then add the loan limit increase from Fannie Mae, Freddie Mac and FHA from $417,000 to $729,750 in 150 or more markets and the upturn is almost built in.
Blessed with age, I don’t need to start to build my net worth or my family so I can unemotionally look at the situation and imagine the current opportunities. I witness the struggles that the young face as my children marry and bless me with more and more grandchildren. I realize everyone currently “owes too much and makes too little” but that alone can’t stop anyone. Seek advice, make a plan and follow it and before you know it, you’ll have the bedrock for your financial future. Will it be easy? Probably not. Will it be worthwhile? You betcha! Remember, it is never what you make that counts; it is always what you do with it that really matters.
Life is and always will be a series of challenges. Those who relish the chance to conquer these challenges will live to the fullest and might just find themselves in a far better financial place than they ever could imagine. I did and you can too. Today is absolutely the best time to begin your life’s financial journey even if it means stopping and making a U-turn! The last piece of advice I can give you: the crowd is generally going in the wrong direction. Set your own direction!