Not a day goes by without a fresh spin on real estate appearing in a few local newspapers nationwide. Many of these articles just regurgitating facts provided by some p.r. person with an interest in having those facts spread out into the marketplace. I have to laugh when I read in my local paper about how the average price of a home has risen 30% in the last year.
Sounds good doesn’t it? It is not. It is an accurate deception and that’s how they can justify printing it. In this case, when you understand that the few homes that are selling are the million-dollar plus homes way up on the hill, you begin to see how this “fact” can skew another less exciting “fact” that shows clearly that near my neighborhood, homes that sold for $265,000 a year ago are now offered at $230,000 with no takers. New townhomes originally offered at $259,000 are now listed at $210,000. Still the spinmiesters want you to believe that everything is rosy. What’s interesting is that while they are wrong, they are also right, without knowing it.
Things really are all right. Maybe not where everybody seems to focus, in the single family detached marketplace, but the industry as a whole is sound. For example, in most cases, when single family suffers, multi-family benefits. Every coin has a flip side. Your challenge is to make sure you know how to respond to the marketplace and benefit accordingly.
With all the confusion with the financial markets right now, I have been asked many times, “What should I do?” Well it’s really easy when you think about it. The first thing you should do is call your lenders.
With the pressure on the financial markets and the dropping of the Fed Rate, now is a perfect time to consider refinancing you properties. Assuming you have a met your ongoing obligations as a mortgagor, you may be able to refinance you properties with a significantly lower interest rate than what you are now paying. This provides a series of great benefits. For example, if you leave your monthly payments the same and just refinance the balance of your note, you will be paying off the principal balance faster than you would have under the old agreement. In many cases, you as the owner could drop years off their mortgage term. Just think what you would do with the mortgage payments when the property gets paid off that much sooner. Is that your early retirement? Is it capital to pay down other debts? Is it investment for new a venture? In whatever case, it is more money sooner than you would have had. And that is good.
The real pro understands the structure of real estate investment opportunities and operation and is wise enough to capitalize on market movements when they occur. While your neighbor is losing sleep worrying over his mutual funds, you should condense your investment period and shorten the time between today and the day you will have met all of your financial goals. At Middle Class Millionaires, we’re happy to help. Good luck. Work hard. Success awaits. Go get it.