GOP Rep Goes on CNN and Destroyed the Network's Fact-Checker Live On-Air
There's *ANOTHER* Disturbing Update on the Trump Assassination Attempt
Soundbite During the Biden Campaign Staff Call Shows They’re in Big Trouble
Florida Man Arrested for Threatening to Kill Trump and JD Vance
Would Jefferson Have Told You What Kind of Horse You Could Buy?
Our Precarious, Flabby Military and a Generation of Unhardy Americans
Biden’s NPA-A Announcement Jeopardizes U.S. Energy Security
End Small Business Tax to Make Main Street Great Again
Duty Drawback Example of Corporate Welfare
Joe Biden, American Lemon
Poverty Is Caused by the Dad Gap
Never Forget That Political Rhetoric Lives in the Realm of Hyperbole
MSNBC Attempts to Trick Viewers Into Thinking They Were at the RNC
Here's Where Most Voters Stand With JD Vance
Another Democrat Senator Tell Biden to Pack His Bags

The Perfect Storm

The opinions expressed by columnists are their own and do not necessarily represent the views of

I am taking the title from the movie that either had a very bad ending or was planning to use the title but didn't really get the story.

In the end everyone dies a tragic death so having a name with perfect in it seems a tad out of touch. Therefore, I intend to write something that correctly uses the word perfect so we don't waste a great title. The storm I am talking about is in real estate in these United States. What I am going to attempt is to show you why now is the perfect time to buy real estate because of the inherent demand and because of the low cost of financing.


Once you see what is happening perhaps you will take this opportunity to heart and begin setting up a real estate (properties) portfolio that can appreciate dramatically in the years to come.

What are the factors that make up this unique scenario? There are many but allow me to highlight the main ones: demand from net population growth, reduced cost of acquisition (low prices) , foreign investors prompted by the weak dollar, banks willing to move property at low prices they own through foreclosure activity, the coming reality for borrowers holding option arms that the teaser rates are either over or will be shortly which will diminish their equity and raise their payments forcing them to look at the alternative of selling at lower prices and finally the lack of competition from other buyers in the market. Add to this are the extremely low interest rates on mortgages, the dramatic downturn of the stock market driving many investors to seek alternative investments, real estate, and the up coming inflationary period which will force real estate prices higher. You now have every reason in the world to become a real estate investor or buyer of your first home.

Now for the "real reasons" you should be a buyer. Over 95% of your friends, family and people you are in contact with on a daily basis will tell you that you must be drinking too much, or maybe not enough, if you are even considering anything as silly as that at this time. Plainly spoken words to you would be "are you nuts'? My rule for profiting in real estate is quite simple. If the thought of buying real estate at a given time makes you nauseous you probably have picked the right time. On the other hand when holding real estate makes you feel like this is the greatest property you have ever owned and Nirvana has set in, it's time to sell. Unfortunately the 95% mentioned above generally reverse the two aforementioned actions; selling when they are sick to their stomachs and buying when everything is going well. You never want to have inflation being your only way out of a real estate investment. Those who have the self confidence and courage to move opposite the crowd are the real "super investors" in our time.


Real estate has three words that are at the heart of an exceptional property: location, location, location. Real estate finance has three watch words as well: earnings, credit and reserves. Location, times three, means that regardless how good the property appears if it isn't in the right location: FAI (forget about it). On the other hand a perfect location with a less perfect property is worth a second or third look. You generally cannot change the location but you can change what's on the property. Real estate is not a national market, nor is it a state market or a county market, but a very local market. Do not pay any attention to what financial analysts are telling you about the national trends. The reality for you is what is happening where you wish to buy. An example of this is Fortune Magazine which believes California is the worse place to buy real estate in the Country. But it goes on to mention the San Fernando Valley is moving well, which if you don't know is right in the middle of California. By the way they are correct about the San Fernando Valley which has already been in recovery for about 6 months or more. I don't agree with them about California unless Florida and Michigan have seceded from the Union.

In California the Bay Area is doing well, the western part of Los Angeles County is also picking up as well as Orange County to name a few of the better areas. Colorado on the whole is doing well mainly because most of it missed the frenzy of the last 4 or 5 years. Upstate New York is fine and I believe Manhattan has done well because of the Europeans opting for our real estate because of the favorable purchasing power of the Euro.


Every state has its winning areas including Florida and Michigan. If you are young enough and are looking for an amazing property the suburbs of Detroit have incredible buys, but you must bet that the Big 3, or 2 or 1 automakers will turn it around. I have been told there are good buys on the water in Florida, but stay away from condominiums. In general, condominiums are the last to move up and are most likely to be the first to move down in a bad market.

Now the problem of paying for the property. No, it isn't as easy as it use to be, but. . . . . the rates today are as low as they get. Usually when this happens real estate is roaring or at least moving up. Now you have real estate at the bottom with rates to match. Voila! You need to qualify today with provable earnings, decent credit, above 620, or above 580 if you take an FHA loan. In almost every case you will need reserves and you should have them to keep your credit intact during a crisis. There are still 100% financed loans, Veteran Administration Loans to $417,000 and some localities and states offering help to first time home buyers. The FHA will give you a loan with 3% down and Fannie and Freddie will finance with 5% down. There are conforming loans to $417,000 in every state except Hawaii and Alaska which has a limit of $625,500. There are high cost area loans to higher values in various counties in about 22 states up to $625,500 with higher limits in three counties in Hawaii. There are jumbo portfolio loans, with good rates, up to $3,000,000 or more at low loan to value numbers. There are also private banking relationships that can get loans to higher amounts so the availability of loans if fine and the costs of loans generally couldn't be better.


What are you waiting for? I know many are seeking the bottom of both housing and interest rates, but how do you get there? I haven't a clue how you hit the bottom but I can tell you that you'll know about six months or more after the bottom is reached. If that is when you intend to react you probably will figure that you missed it and move on. Hitting the bottom and figuring it's too late when you miss are two major mistakes. Don't make them, instead act now or very soon and you might find you put the cornerstone in your financial empire without even thinking. The majority of real estate profits are made by buying right so why not get started, NOW?


Join the conversation as a VIP Member


Trending on Townhall Videos