Some Planning for the future (in Real Estate)

Dated: September 13 2020

Views: 226


I normally write this column every Sunday morning. I started it in 2001 at at the peak of the real estate boom.  It gained about 30,000 subscribers. I purged it down to just my 2000 or so active readers in 2007 and now I am back to 7000 or so.  Many of you are in the business like me, many are pre retirees like me. Some, indeed, are new.  But you all have an interest in real estate. I want thank you all for sticking with me.   Today I want to talk about what I see happening in the real estate market and the coming economic climate and give you some actionable things to think about.

 

 First, an update on my activity (how I pay the bills). By the way,  I took the last four weeks off from writing.  I have vision issues that drastically increased the number of typos and I took a break. (I  had some minor eye surgery):

But I did not take a break from real estate.  This week I have three closings , am working with four different buyers, have my own house up for sale, (3d tour here) , Gail and I are planning an addition on Otter Cottage (our vacation home on the Nottely River in Murphy North Carolina, and in two weeks will start marketing the first 8  of 21 solar homes that will go ready for sale (and occupancy) in Lehigh Acres. The first eight are being “punched out” now.  My brother Bill (mostly Bill) and I are finishing up the renovations on a 3/2 pool home in North Fort Myers that will go on the market in a few weeks for $188,000 (no link yet). I have a gorgeous Golf/Pool home for sale in River Hall, and another renovation off McGregor along with a few lots and a warehouse Magnus is completing. Gail and are have been shopping for a smaller home as we will stay here in Fort Myers.   Mike Brosy, formally with Lennar, has just joined our team to help us sell all of these homes, and my daughter in law Danielle is rocking it with EXP Realty as well. I am getting licensed in North Carolina (just need to take the test).

 

Now back to the economic climate.

Inventory is low, prices are increasing and money is very cheap.

MY MAIN POINT TODAY:

We are going to see inflation coming soon and we need to prepare. Normally when the US government wants to stimulate the economy, they lower interest rates. Today with interest rates near zero already, the only thing that the government can do is print more money to stimulate the economy. This will undoubtedly lead to the devaluing of the dollar and rising prices: INFLATION.

When prices are rising,  we want to own assets not dollars. Real estate is my asset of choice. (I am also accumulating cryptocurrency but that may be the subject for another column).

There are three general categories in which you can action in right now to prepare : income , expenses , savings.

INCOME

If you are able, build up secondary sources of income or buy an income producing asset. (more below)

EXPENSES

Pare your expenses where you can: consolidate, eliminate, and defer. (Any expense you can pay later with cheaper dollars, do so).

SAVINGS

If you have cash, get it working for you and LEVERAGE it. Your cash will begin to be worth less, very soon. Park it in appreciable assets, bonds, or dividend paying stock.   (I am not a fan of gold and silver, but I sure like them better than cash.  Gail and I are putting 15% of what we have in crypto (Bitcoin and Etherium). Indeed we are still saving (accumulating) money.  My father taught me a long time ago to put savings as line number one in my budget and even at my point in my life that is still the case.

 

Real Estate

My advice is to get a thirty year fixed loan and buy a rental property.

Here is a link to my dropbox. This is a report I did on the 3/2 pool home I mentioned above. (It is showing a 32% IRR and 14% cash on cash) Buy this or something like it, or buy a new build (excellent deals right now) or buy a renovation.  Buy a vacation rental property.   The analysis I did above assumes only a 5% appreciation, with inflation this will be MUCH higher.

I can run analysis for you on a property you are considering. I can find you one.  New build to rent homes  can return a 11 percent cash on cash and an IRR of 21% (at a normal 5% appreciation.) (Don’t understand Cap rates and IRR? See article here)

 

Folks, keep in mind that I broker real estate to make a living. I own real estate to build wealth.

 

Let me help you. 

(If you are an agent, I would like to talk to you well).

Learn more here:

www.greggfous.tips (my You tube channel)

www.greggfous.cloud (my EXP channel)

 

I welcome your comments.

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Gregg Fous

Real estate has been my passion since I took my first Al Lowery class on real estate investing in the 1970’s. I vowed during that class that I would buy one property a year. Over the next five ....

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