Scroll down to see what Ken thinks about the current real estate market. The blog below first appeared on Ken's website on August 6, 2008.
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Read below to see what Ken thinks about the current real estate market.
The blog below first appeared on Ken's website on August 6th.
Frequently, I am asked about my opinion on status of the current real estate market, it is a loaded question but one that I enjoy answering.
There are numerous statistics and articles that are on the topic of real estate on a daily basis. You can get varying opinions on the real estate "bottom" on most every major financial magazine, throughout the internet and all the major newspapers. It seems that everyone has their opinion on the magnitude of the problem and when it will be "back to normal". It can be frustrating and confusing because there are so many different and conflicting opinions and please.....be very careful of those that have an alternative view point while pushing their own agenda.
The reason that the real estate market is so important is obvious. The success of the housing market determines peoples spending habits. It is no secret that, retail is way off, travel is down because the cost to travel is way up...even the casino industry is down. The rising cost oil has a large impact on this as well but not for those that invested in appreciating assets as much as those that invested in depreciating assets. If you have assets that are going down in value and they are not cash flowing, they are depreciating and they are worth less than you paid.
The last 10 years many people used their homes like an ATM machine to buy mostly depreciating assets, like boats, TV's and big SUV's. Try selling your 2006 H2 Hummer on today's market and you will get $30,000, this car was over $60,000 just two years ago! And how about that flat screen TV? I decided to look on Craig's list and guess what? You can buy a PANASONIC 36" Flat Screen HDTV Television w/Remote & Manual for $25.
On the contrary, if you invested your hard earned money into appreciating assets, like gold, silver, or real estate you might have done very well, depending on your choices. There are many, many businesses and industries that are booming as we speak. I personally moved most of my holdings into these three categories. I bought silver when it was at $9 per ounce, it is now over $18 per ounce. I bought multifamily housing in areas that needed more rental housing. On just one property we have increased the value by about $4 million in one year, a 20% increase.
These are considered appreciating assets. They have grown in value and so have I. The question is how and why did I know to make these moves at the right times? I became educated on how to manage my own money. I understand the questions to ask if I am investing and if I do not know, I ask until I do understand. So many people just transfer their money into blind investments without really understanding the costs, fees, commissions and the industry that they invested in. It might surprise you that many money managers still get paid an annual fee to manage your account regardless of the performance.
If you are trying to time the market, perfectly, then you have more of a gambling mentality than a long term investment strategy. Most people understand the concept of buy low and sell high. They don't want to buy too early.....or too late. While I understand this theory, the overwhelming majority of the people want to know this information so they can calculate the "equity" in their investment, so they can sell or start "flipping" again, for a quick gain.
Doesn't anyone learn their lesson?
Part 2 of this two part blog originally appeared on www.KenMcElroy.com on Monday, August 11, 2008.
Kim Obert
Marketing and Public Relations
KenMcElroy.com | kim@KenMcElroy.com
MC Companies | kobert@mccompanies.com
8553 E San Alberto Drive, Scottsdale, AZ 85258, USA
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