We are at the crossroads of a new phase of our economy… The press states our government is out of stimulus money -which isn’t entirely true.  The public has been taught to vilify the banks -what a farce as the bank gave society the loan it wanted to achieve dreams.  Little press that the TARP program that stabilized our banking system (and thus our way of life) actually is making a profit.   Job creation is minimal.   Hmmm.   So what is missing? Can we agree that as entrepreneurs in a capitalistic society we are missing the courage and encouragement to venture out in taking risk? It is these ventures that foster growth and thus, employment -whether it be with a one employee company or a Fortune 500 firm.

You see we need a government that fosters growth. Our government may say they do -but reality is they are not. A true business man or woman understands finances and the economics of truly paying for an operating business.   If your not running a profitable company (or never have) and your opposing my thoughts -perhaps its because you don’t truly understand what makes the economy work and how you derive income to live.  No offense -unfortunately alot of truth.  Take the blinders off and let it sink in if your truly into growing personally, spiritually, and financially.

So what’s holding us back you ask?

Let’s see.  Government instituted health care program, lack of direction with major taxation, attempting to stop drilling (everywhere -while the rest of the world continues), Cap & Trade, lack of an RTC program, and on and on.   Sure we could argue ad-neusem on individual topics or go down that slippery slope of politics. Step back and understand that’s not the point.   You see the support by our government to help growth consists of question marks (that means unknowns) and slaps to the face (by stopping drilling -guess how many lost jobs with that).   These are hurdles -list any initiatives with actual substance -you’ll hear nothing but crickets. If you really run a business and choose to make investments which is different then speculating, your hesitating in making new investments.   Can we agree that most  simply won’t take those risks unless all this signals align perfectly?   I hope you see the problem.

That being said, I believe we have to be prepared for a muddle through economy for a good 2-5 years.  The days of go-go growth are behind us and cycles indicate we won’t see what we experienced the last decade (at least for us who were riding the housing wave) for another 15-20 years.   Does that mean money cannot be made?  Certainly not.   Opportunity is everywhere.

For us real estate investors the road has been treacherous the last couple of years and just as predicted the latest housing sales data (as we’ve predicted months ago) is continuing a downward track after the expiration of the Tax Credit for Home Buyers.  Folks This is the time to buy.   If you cannot get bank financing, you’ve got to change your focus on owner financed property. There is more to price in buying right -especially these days.   Read my article: “Owner Financing…” for an idea as to how the terms of the financing arrangement can be a greater tool to wealth then just a discounted purchase price.

I’m probably ahead of the curve; however, I’m going on the record to state that our government needs to re-institute a RTC type program that helped force/move out all the dead-weight real estate on the books during the Savings & Loan Crisis.  It was a day that the top 40% of real estate investors could buy a REO type property (via mls) with minimal down and good long-term fixed financing.   Most investors realize that bank financing doesn’t exist today if you’ve maxed a 4 loan limit or commercial lending isn’t an option.

JUST WHAT DO YOU THINK IT IS THAT WILL MOVE ALL THE OVER-SUPPLY IN HOUSING????

That’s right!  Real Estate Investors! You see if I and you can buy some 3-50 homes to take out of the inventory -could we agree that investors will soak up supply faster than one owner occupied buyer at a time.   Sure the price/terms have to properly correlate to insure a smart buy/sale so that rent can cover expenses.  I would hope that we would see this type program instituted by spring of 2011.

Washington -WAKE UP!

Please don’t take my post as any political slant -my goal is to simply look at basic economics and what makes the entire process of moving money work.   Taxation is the other issue where action is needed by year-end.   We need stimulation not additional burdens. Ok.

We are at a crossroads.  With the Summer of 2010 coming to an end, reinforcement and some semblance of stabilization has occurred.   However, we are  vulnerable to many different factors that could tip us in the wrong direction.

What are your goals for the next year?  Where do you think our economy and/or housing markets will be a year from now.   Think about it.  What do you need to take that step in a forward direction?

July 18th, 2010

Written by Tyler McCracken

Local Real Estate Investor & Hard Money Lender in Charlotte, NC - Read Bio at our "About Us" page on the top right of this page.

Leave a Reply

Your email address will not be published. Required fields are marked *