One of the things that I find encouraging about entrepreneurs is the confidence they gain once they have initial success. Success emboldens then to take further and maybe bigger risks. Of course, it’s always wise to look forward to your long term future by first funding a 401k or IRA retirement account but after that you need to look for real wealth building opportunities. Today, that is in many of the real estate investment opportunities available in almost every marketplace.
Gain More Leverage
It’s true that bank loans are not easy to obtain for most investors these days. However, for those that came through the Great Recession relatively unscathed, low interest bank loans offer a great opportunity to leverage other peoples’ money in today’s real estate market. Now is the time to take advantage of historically low interest rate as future interest rates are almost certain to rise.
The Federal Reserve’s position on future interest rates is murky at best and the European Union has indicated that interest rates will rise going forward. Wall Street and the European Stock Markets are on the decline. All of it means that money availability is going to be getting tighter and tighter. If you’re in a position to get your hands on other people’s money, now is the time to do it before interest rates and inflation take off in a way never seen before.
Money is Flowing to Business
Real Estate investing is the low risk business of the future. As this article is published, the Market Economics preliminary index of U.S. manufacturing stands at 56.7, with 50.0 being the non-growth point and anything above it indicating a growing economy. Business growth is slow but it does continue. The U.S. market continues expanding while all eyes are on the shrinking China market and the forever-stalled European market. What the big picture is telling us is that money will continue flowing to U.S. businesses but not to the low paid masses. American entrepreneurs have always led the business market.
Pick your real estate marketplaces carefully but real estate will always be a better investment than stocks and bonds. Consider the world gateway cities such as San Francisco, New York City, and Washington D.C.. Real Estate in these cities not only didn’t contract in value during the recession, it continued to gain value the entire time.
The point being is that smart real estate investments always out perform stock and bond investing. Today’s news from the Federal Reserve indicates that interest rates will be on the rise before the end of the year. What better investment move can be made than locking in a 15 or 30 year mortgage at 4.3% at the exact time when it’s becoming easy to understand that interest rates and inflation are both heading straight up. Inflation heading up means that real estate appreciation will out pace inflation to create real profit. Getting in at a low interest rate is the same as the well-known investing clichéof buying low and selling high. Now is the time to do it.
Today’s Market is Different
What makes today’s market different is that not just anybody can get in. It remains difficult or impossible for the average guy to obtain a loan and will remain so for many years. That means the people who showed the wherewithal to weather the previous economic storm are the only ones that can qualify for ultra low interest rates. That also means that competition for great real estate deals will remain low. Hence comes the conclusion that in today’s real estate market, success breeds more success.
Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.