Mid-Day Market News & Commentary by Chris McLaughlin, December 29, 2008
http://www.shortsalesriches.com/welcome.html
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You really can make a huge six figure income … even a 7 figure income … with no money out of your pocket in the deepest recession our country has ever faced. How? Just register now for our fr’ee webinar unveiling the strategies to use in this economy…all on Tuesday night at 9 PM ET:
https://www2.gotomeeting.com/register/638209573
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CNBC reported today that several private equity firms are circling the wagon to purchase IndyMac Bancorp, the huge bank that went belly up because of the subprime mess that is now run by the Federal Deposit Insurance Corporation (FDIC). The prospective buyers include J.C. Flowers & Co., Dune Capital Management, and Paulson & Company. In the small world of finance, IndyMac was founded in 1985 by Angelo Mozillo and David Loeb, who later went on to found Countrywide Financial, which is now owned by Bank of America. Looks like the initial management team setup both companies for failure, huh?
And if you thought the housing mess was limited to just the United States, think again. Reuters reported today that prices dropped 8.7% in England and Wales for 2008 and are expected to fall further.
Now on to our real estate investing education section…
As 2008 draws to a close and short sale investors look to 2009 the question on everyone’s mind is whether or not the economy will continue its downward spiral or experience a recovery. Despite the considerable abundance of doom and gloom reporting in the media, there are a few bright spots that aren’t receiving the full attention deserved. Short sale investors searching for a silver lining in an otherwise cloudy economic environment would do well to focus on these current trends:
1. $40 per gallon oil and $1.65 per average gasoline. How low will it go and how long it will last is subject to debate but one thing is certain; those who rely upon gasoline and oil are experiencing a bit of much needed relief in the form of lower prices.
2. Low Mortgage Rates & Dropping LIBOR Rates. The cost of money is cheap – not just inexpensive but downright cheap. Make no mistake about it, real interest rates are the lowest in decades and make it less expensive than ever to borrow money to build a short sale empire. It is possible to buy more house for less money while simultaneously spending less on taxes and insurance. It’s a win-win-win situation for those with the courage to buy when others are selling.
3. Huge Fiscal Stimulus. Coming soon to a federal budget near you is a huge fiscal stimulus package destined to become one of the largest in history. Bridges, roads, hospitals, schools, utilities and other mega-projects are slated to spur the economic growth needed to jump-start the economy. Whether you believe the stimulus package will work or worsen the long term economy, one thing is certain; those workers will need affordable and convenient housing for long term projects. Short sale investors would do well to make a mental note of future road plans, schools and other large building projects in the target areas of interest. Whether you buy low and sell high or wait for the path of progress to reach you, it is a position of strength rather than weakness.
4. Long Term Lag-Times. The global decline in commodities and other tangible assets will eventually lead to long term shortages with tremendous upside profit potential for short sale investors. Remember, there is a lag time between the supply and demand which will result in high demand and low supply once the economy stabilizes. Everything from basic building materials to mineral rights, timber and even natural gas holdings will be impacted. Savvy short sale buyers would do well to realize the long term potential inherent in their holdings.
5. More Renters. Foreclosures aren’t over…in fact, due to legislative restrictions on the number of “bad loans” and tangible assets a bank may have on the books at any given point in time, the current bail-out simply provided the liquidity required for banks to prepare for the 2nd stage of the growing mortgage meltdown. Most experts agree that what began as a sub-prime mess is expanding into ARM’s, low/no Doc loans and even prime mortgages in response to rising unemployment, falling stocks and bonds plus a plethora of other economic problems hit the average homeowner.
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See you at the top!
Chris McLaughlin
http://www.shortsalesriches.com/blog
P.S.:
Are you ready to get 2009 rolling? Then it is time to come to our LIVE “Recession Proof Real Estate Investing” webinar tomorrow night – Tuesday – at 9 PM ET:
https://www2.gotomeeting.com/register/638209573
P.S.S.:
Have you seen the hilarious “Short Sale Kid Gets a Holiday Haircut.” Don’t miss this challenge issued by Nathan Jurewicz:
http://www.youtube.com/shortsalesriches
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