Posted on 04/10/2012 10:34:28 AM PDT by appeal2
www.FinancialSurvivalNetwork.com presents:
Dr. Marc Faber (Gloom Boom and Doom Report) thinks real estate in extremely depressed markets may be a good buy. He may be right, but he could also be wrong, and the markets could decline further. Yes markets in Florida, Phoenix and Vegas have declined by as much as 75% since the economic collapse began in 2007. However, that doesn’t mean these markets can’t decline even further. If you see a house in a boarded up subdivision, and it’s selling for next to nothing, that doesn’t make it a good buy.
We propose several means of valuing a property you’re considering purchasing:
1) Is the house selling for 3 times or less than the average income of that neighborhood? That’s a traditional valuation that became obsolete during the housing boom, but has seen a revival.
2) Is it cheaper to own than it is to rent, before the tax benefit? This is becoming more and more prevalent in especially hard hit areas of the country.
3) Can you realize a positive cash flow on a home bought for investment or a multifamily property? As Robert Kiyosaki, of Rich Dad, Poor Dad acclaim says, an asset is something that returns a cash-flow. A liability is something a costs you money.
Of course, you shouldn’t forget that pot of government subsidized mortgage money. Artificially low rates and minimal down payments could make a real estate purchase very attractive. But be selective; don’t settle for anything less than you want. After all, you’re a buyer in the mother of all buyer’s markets.
(Excerpt) Read more at financialsurvivalnetwork.com ...
“real estate in extremely depressed markets may be a good buy. He may be right, but he could also be wrong, and the markets could decline further”
Whatever.
The values may decline further, but not by much.
If you have the tolerance for temporary losses for the next couple of years, it probably is a good time to get into real estate.
Yea, like losing most of the walls and certainly a large portion of the roof to fire and depending upon what the rioters destroy or remove before setting it on fire.
It’s a good time to buy a place way, way out of a city.
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