Well - another day - and more crazy bad news about the real estate market. Let's sum it up:

• The banks are becoming "semi-nationalized" as the government moves in to "help" them.
• This government "help" has increased the national debt to the point that mortgage rates have experienced the largest single rise in the last 22 years.
• Home values are projected to continue to fall.
• Oh - and the stock market is experiencing historic volatility. 

Soooo...now what? Well - here are some things to remember

• The rental market, along with the home owner market, form a "zero sum" game. Ya gotta be in one or the other !!
• Apparently, people are leaving the "home owner" market at an unprecedented rate. Only one place for them to go...(rentals).
• Favorable tax laws relating to rental property have not changed much. You still get expense write offs, depreciation write offs, home office write offs, mileage write offs, and the opportunity to "trade" the property when the depreciation schedule declines over time - thereby starting a brand new depreciation schedule and again - delaying any tax related gains hit. It's called a "like kind exchange". 
• Real estate prices are DOWN - making it a wonderful time to BUY.
• Rent is a true inflation hedge. Rents move - and almost always UP.

Sometimes - it is a good idea to listen to the "rich guy". And not the "dot-com"'ers that got rich by being in the right place at the right time. I mean the guys that got rich and stayed rich, regardless of the marketplace.  One such person is Warren Buffet. And Warren has been talking lately. By the way, Warren's wealth has INCREASED over the last year.

Warren says "Be fearful when everyone is greedy, and be greedy when everyone is fearful".  That about says it - doesn't it?  It is fair to say, "everyone" is fearful in the real estate market right now.

So - how does one "become greedy" in the face of this opportunity?

Well - one obvious answer is to become a landlord. Or at least invest in rental property and have a property manager do the dirty work.  Why?

• The tax advantages are substantial. Which is good, 'cause boys and girls, your taxes are going up. Someone has to pay for the "kegger" the government is throwing for the financial community.
• The wealth building potential is as close to a "sure thing" as there is out there. The property value will increase over the medium / long term, if it is purchased correctly (use an agent).
• Purchase prices are DOWN, and rents are moving UP. The heck with "write-offs", I am talking about investments that return over 20% annually and provide sheltered cash flow. Income. Money. Every month.

I have said it before. No matter how "bad" an economic situation seems to be, it is a zero sum game and an opportunity exists somewhere. The trick is to find it, and ACT ON IT.

So - there you have it. That's the answer. The media loves to bury you in drama and doom, because apparently it makes "good news".  And that has the effect of paralyzing the general population. Don't be part of the general population. Warren Buffet certainly isn't. 90% of all millionaires in this country made their money in REAL ESTATE.  

The analogy of being a sheep is appropriate. The sheep follow the pack. They stand still and eat. They wait to be told what to do (think media). And every year they get clipped right down to skin and bones (think taxes). And then they do it again......

Might as well rent to them. 

And by the way - I do maintain a comprehensive list of ALL investment properties currently available in this area, along with financial projections including cash flow, return on investment and capitalization rate.  I'd love to hear from you!

Peace.