Want To Be Profitable In This Real Estate Bubble? I'll show you how in just Three Easy StepsWritten by Chris Anderson, PhD
This is a question I get almost everyday from either our web site GetPreconstructionProfit.com or from my individual investment activities. The question is "How Can I Be Profitable When We Are In A Real Estate Bubble"? STEP#1. First you have to recognize that in order to make money in almost any market (i.e. stocks, commodities, real estate, etc.) you need to have market in motion. In other words, prices or value have to be changing substantially, either up or down, for you to make money. Did you know that many traders back in NASDAQ bubble made millions by adopting a style that made perfect sense for type of bubble market that was being experienced? Of course this was financially devastating to buy and hold investors who bought at market top. So what is difference? The answer is a difference in investing/trading style and risk management. STEP #2. Now throw a little reality into picture. Specifically, you need to realize that nobody can consistently predict turning point of a rapidly moving market. People who pay attention to value (which is always a wise move) can tell you when things are out of whack with market, but they cannot tell you if market will turn in a week, a year, or a decade! Warren Buffet correctly predicted that stock market was way over valued LONG before it actually corrected. Since Warren is a value-type investor, it made perfect sense to stay on sidelines. In contrast, many active traders became multiple millionaires during that period and then rapidly adapted to market downturn. Both were "correct" for type of style that they employed. STEP #3. You have to realize that there are many ways for an overvalued market to correct. For example, in real estate markets, many people are claiming that price-to-earnings (P/E) ratio is out-of-balance; that is price you can collect for rents in a year relative to purchase price. Typically this should be around a ratio of 100 to 150 for a good cashflow investment. In some areas of country, this ratio is over 400.
| | The Million Dollar Real Estate Tax BreakWritten by Mark Walters
Everybody should know that under current tax law you can sell your primary residence and any capital gain up to $250,000 ($500,000 if married) is tax free.Wow... is that powerful!... and why aren't more investors taking advantage if that "loop hole"? The only requirement is that you live in home for 2 out of last 5 years... and it is your primary residence. That means you just must live in house 24 months to get tax savings. What if you match that tax break with a FHA 203(k) loan? Your heart should begin beating faster if you understand 203(k). Look at features of this real estate loan... FHA down payment (3%) Flexible credit qualifying Assumable loans Finance up to 6 months of mortgage payments Purchase or Refinance AND IMPROVE all in one loan Upfront mortgage insurance waived Get it?... One single loan is used to pay for purchase (or refinance) and cost of renovating home. Cheap, easy money that not only gives you ability to buy home... but also money to rehab it... all in one loan!... with no payments for 6 months! The FHA 203(k) loan is available to borrowers of all income levels, but only to homeowners who plan to occupy property, and for homes with one to four units.
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