A Case For Real Estate / The Great Depression

This is not the first real estate bubble we have had “burst” and it will not be the last. It is my opinion that the government got us all into this mess and it is their obligation to get us out….NOW.

The government is constantly meddling in the real estate business. “First time home buyer tax credit” of this year was just one in a long history of our political “leaders” trying to drum up business for the real estate industry.

In 1919 The National Association of Real Estate Boards (Now NAR or National Association of Realtors) was promoting real estate via the “Own Your Own Home” campaign. This was a industry based program run by Realtors. Herbert Hoover (the then secretary of commerce) encourage the United States government to take over this program to increase home ownership. And the cycle of real estate was forever altered. Since then, it seems like the government has had a hand in real estate, trying to make it more and more affordable so “every American” can live the dream and own a home. This of course so the banking industry could stretch loans out over 30 years and rake in insane revenue on those 30 year loans!

After our country went into the “Great Depression” in the 20’s, how did the country get out of that mess? 25% of Americans were out of work and most of those jobs were construction related! Reigniting the real estate market back then was a great way to create jobs and get the economy rolling again! Talk about a “Stimulus Package” on steroids!!!

So what does America do in 2008 and 2009? We repeat what history taught us and get the real estate industry back on track, getting value back up, getting those construction workers, surveyors, roofers, plumbers, electricians, lawn service companies, painters, Realtors, lenders and everyone related to our field! WOW, what a TRILLION DOLLAR BAILOUT could do for the economy………….. except Obama flushed that toilet when he blew the trillion on HIS ego driven Stimulus package that has clearly and unequivocally FAILED the American people.

The government dug the hole. Now the CAN’T get out of the real estate game…. can they? I say YES they can…… eventually. If they eliminate the capital gains tax on real estate across the board, no matter how short of a time a person has owned the property, we would clear out of this mess sooner rather than later. Further, property taxes like we have in Florida are BULL _ _ _ _!!! Every state that has property taxes could raise the sales tax .02 per dollar and the revenue created would more than offset the income generated by the loss of property taxes. Now (in Florida for example) the tourists can pay some of that money to rebuild our roads, etc. (since they help destroy and use those roads now) This will reduce the overall cost of home ownership (total payment) by 1/3 in many cases. Buyers who can’t afford to buy, now will be able to and as they buy those starter homes, everyone can move back up the food chain!

After the market gets healthy again, we can only hope that the government can stay out of the business of trying to get every American to own a home. (How did that work out for you President Clinton?). The TRUTH IS, some people will NEVER own a home and will be lifetime renters. America, there is nothing wrong with that! Everyone does not need to buy or own a home for America to be great! We just need responsible leadership that understands economics and how the system works. 2012 seems really far off to me, but November 2010 is just a few weeks away! I can FEEL the market recovering now!


Be Prepared To Take The Risk

The millionaires are being made again. As the Florida real estate market decline stops to a grinding halt faster than the Tampa Bay Rays losing ways, those day traders of the dom com boom and those pre-construction “flippers” have given way to the real investors. Those who are buying now in a frenzy will be the true kings of real estate investing in the next few years!

Back in 2005, it seemed like anyone could make a quick buck in the fast appreciating real estate market! Who thought it would end? Although my clients made millions during the boom, I certainly had my share of short term losses with some of my clients. I gave some advise to valued clients to buy while markets were booming. Most of my investment clients were wanting to put minimum monies down ($5,000 was common), buy pre-construction, wait the 10-12 months for construction completion, and then sell at $80,000 to $100,000 profits per home without having to make many, if any payments on those SUB-PRIME LOANS! The good times rolled! It really was “easy money” if you got in at the right time. Words like “can’t miss” and “sure thing” flowed from the mouths of Realtors and lenders alike. I almost purchased three homes for my children because I was fearful they would never be able to afford to purchase a home of their own when the grew up! Visions of New York flashed through my head! Like some of my investors, the Arcuri family took their lumps when the bubble popped! But my confidence in a rebound remains very, very high!

POP the market went first quarter of 2006! Soon it will be the first quarter of 2009!

Those who liquidated and took the loss shortly after the bubble broke were the ones who took the minimal loss. Those who held on too long, have to wait awhile to bounce back. And bounce back we will. Despite the bitter taste, educated investors continue to invest. Those who don’t have the stones for real estate need to stick with their “real” jobs of wrestling or playing ball or working for “the man”. The ones who don’t want to be taking chairs to the head and flying around the world like a gypsy when they are in their 40’s will give real estate another look. True investors know that you win most of the time in real estate, but once in a while you lose! Over the life of your portfolio, you WIN BIG IN REAL ESTATE!

To those “bad deals” that the investor has not sold, the unintended landlord that is making up the shortage in the payment from the tenant, I say hold on! History has told us that TIME will turn a lame real estate investment into a goldmine. TIME. Since Tampa Bay was saturated with investors and much of the sales activity in 2004, 2005 and 2006 was investors speculating on fast returns, Tampa is poised for a quicker than normal bounce back as opposed to other areas of the country and even the state. Once that over-supply of homes equals out to the demand, Tampa will again lead the state back! Only Lakeland in my opinion will have a faster bounce than Tampa.

The good times will be back soon! Where will you be? You can look back in 5 years and say “Damn, I should have invested in 2008 when the market bottomed out” or you can say “I’m so thankful I purchased in that down market. My wife is so happy with her new Bentley”……… it’s your call. I can only lead the horses to the watering hole, you have to drink the Cool-Aid!