In our opinion, well located real estate purchased at below replacement cost is much safer than investments made in 2004 through 2007. Consider the situation just a few years ago. Real Estate was perceived to be a fast way to make a lot of money quickly. Property values were increasing, sometimes faster than buyers and sellers could keep up. Lenders were ready to lend with very little documentation. Everyone wanted to get in the game. And, many who bought in from 2004 to 2007 now own property that is worth much less than they paid for it.
Now let’s look at today’s environment. There are fewer buyers, fewer lenders, and fewer transactions. Foreclosures have been rampant over the past 4 years. Property values have declined. Some properties can be purchased at prices that are substantially below replacement costs. Those with capital are demanding (and receiving) a discount on pricing and a much higher return on investment.
If you purchased a property at a discount of 25% in 2004 through 2007, you may find that today’s value might well be less than the price you paid for it. If you invest in property with a discount of 25% (or more) off TODAY’S low values, it is a far safer investment than a similar purchase just 3 to 4 years ago.
FOLLOW THESE BASIC FUNDAMENTALS TO CREATE A “SAFETY NET” AND PRODUCE WEALTH:
1. Buy Below Replacement Cost
2. Stay with sound metrics
3. Invest where jobs are being, or will be, created
4. Use Low, or NO Leverage
Here's to your success!!
