Only a few years after the housing bubble in the United States, the concept of investing in property is beginning to take hold among investors.
Investing in real property is a very real investment strategy. Now that rates are at record lows while homes are falling in price, and rents are rising, investing in property may be one of the best ways to retire.
In a new wave of household stimulus, President Obama plans to address the growing gap between wages, mortgage payments, and mortgage loan values.
In a speech about the American economic recovery, Obama cemented the idea of refinancing American home loans at record low rates. According to those working on a plan, the American refinancing initiative could save American homeowners as much as $70 billion per year in mortgage loan interest.
The American real estate market may be underwater, but a new buyer is stepping into the ring to boost market prices – hedge funds.
Historically, hedge funds have been limited to investments in the stock and bond markets. In fact, their name is derived from a market strategy (hedging) where fast traders move in and out of a position to profit on minute differentials in security pricing from market to market. Recently, high frequency trading has made hedge funds even more profitable.
But now hedge funds want a piece of main street. The new asset class of the hedge fund universe is the single family home.
There have been many complaints of a consumer credit crunch, especially coming from those in the market for a new home. While the money isn’t always easily found, there are more than a few opportunities for borrowers to get into the real estate market cheap.
Relatively speaking, real estate isn’t always an asset that is easy to liquidate. While we may often discuss how small cap stocks are hard to buy and sell thanks to their limited pool of traders and investors, homes are harder to sell by an order of magnitude.
That is, where it requires only capital to purchase a share, or many shares, of stock, you have to live in your home. You have to pay property taxes on it, and if it has a yard, you have to mow it. That’s a lot more than just money—it’s responsibility.
Have you noticed lately that real estate investments aren’t being discussed as investment vehicles for the highly-leveraged; in fact, I think I’ve read more data about unleveraged real estate investments in the past two weeks than I have my whole life.
With the credit crunch and real estate bubble pop coming to a close while yields plummet to record lows, investors are again looking back into real estate investment trusts as a way to generate income with cashflow producing real estate. If you like dividend income, you’ll love REITs! Read more…
One of the most important elements of a good business deal, whether a leveraged buy out or an investment in real estate is the cash on cash return. Read more…
Commercial real estate is in a world of hurt. A combination of faltering businesses, falling rents, record vacancy, and a second wave of financing resets are putting a pinch on commercial real estate investors of all stripes. But one major factor, a change in how we shop, will be the final nail in the coffin. Read more…
In the US, and all over the world, real estate investors are seeing green in a time when there is plenty of red. These investors are looking to buy properties that will not only appreciate, but also provide positive cash flow at the time of purchase. To do so, they’ll have to follow the popular 50-2 rule. Read more…
As you’re probably already aware, the worst has still yet to come to the residential real estate market in the United States. To date, only $400 billion of housing bubble loans have yet to be reset, and another $900 billion are to come down the pipeline by the close of 2012. Read more…
Investors can’t afford not to keep a watchful eye on lending levels which have a direct impact on inflation with how much in reserves has been added to the banking system. Luckily for us, and the economy, consumers still aren’t willing to take on negative-carry debt to fund consumption spending. Can we get a big hell yeah? Read more…
In a phenomenon that couldn’t be more ill-timed, tens of billions in Alternative mortgages are due to be reset in 2010-2011. Though not sub-prime, many of these loans are interest-only, those in which the borrower makes no payments on principle. Once reset, borrowers could have monthly payments 15-20% higher than today. Read more…
Making the case that China is now in bubble mode doesn’t seem as ridiculous as it might prior to the global recession. In fact, I have been long Chinese stocks for years, mostly due to the huge export driven inflows of cash. However, as China’s economy becomes more consumptuous, particularly in real estate, it appears the country may be entering what may be difficult to exit—a huge real estate bubble. Read more…
It looks like a second stimulus package could be in the works. This time, the stimulus will come in at $100-150 billion, roughly 1/5 the cost of the first stimulus effort. Read more…
Dubai World, an investment arm of the United Arab Emirates, indicated on Friday that it would need as much as 6 months as an extension on its debt obligations. Though the market may have dipped on Friday, Dubai’s debt is little concern going forward. Read more…
Congress has extended the popular $8000 tax credit and opted to begin a new $6500 tax credit for home buyers who already own a new home. Here are all the details regarding who qualifies and who doesn’t. Read more…
Prior to this week the FDIC had closed just over100 banks. However after “FDIC Friday” nine banks shut their doors, mostly due to plunging real estate values in the western US that eroded the value of the collateral backing the loans. Read more…
As traders prepare for another bout of earnings, analysts are most focused on the banking sector. Strong stock returns since March 9 may help banks clear earnings season with a positive number, even as loan losses continue to grow. Read more…
You might think that a falling unemployment rate is a bad thing, but in actuality as unemployment dips and job losses continue, falling unemployment is TERRIBLE for the economy. Of course, like most indicators, much of the disparity comes from how we calculate the numbers. Read more…
This is something I am very familiar with. I’m looking to rent a home in my area, and I’ve been shopping around for a couple hours each day to find the home I want. Here’s a few tips for scoring that property at the price you want. Read more…
In today’s real estate market, sellers can’t afford to be choosers. If you’re a prospective first time home buyer or looking to grab some investment properties at bargain basement prices, there are a few tips to knock thousands off the price you pay. Read more…
Homeowners who are unable to sell their homes, or unwilling to lock in huge paper losses, have begun to trade homes with others. The trend, which is creating huge interest among cash strapped homeowners, involves finding another couple willing to make the housing switch. What was once a buying spree has now turned into a trading spree as some look to trade up while others trade down. Read more…
The American Recovery and Reinvestment Act of 2009 better known as the stimulus bill has a very interesting tax cut that is sure to fire up the real estate market. In the bill as drawn up American’s would receive up to a $15,000 tax credit for buying a home in 2009. I’ve dissected the bill and made it easier to follow than the full amendment. Read more…
We know what happened last time mortgages got too cheap, this time they’re even cheaper! After falling off the peak in October, interest rates have dropped for 9 straight weeks to fall to levels not seen since Freddie Mac started surveying lenders to find an aggregate rate for the 30 year fixed mortgage.
The 5.1% 30 year rate is pretty cheap but not as cheap as it could be considering the FED’s lax monetary policy this year. But one thing is certain, lower interest rates are indicative of more money in the banking system and banks wanting to lend. Banks have no option but to begin lending out the money TARP and the Treasury gave them, they’re so far behind on other loans its a deadly scheme to race back to par. Read more…
