Subscribe to this blogShould you “Stay the Course”?
Attention real estate, paper and cash flow investors who have always taken advantage of the dream to grow their wealth thanks to knowledge, persistence and hard work!
With the economy what it is—the expectation of the commercial real estate market to take a nose dive and for other investment strategies to follow—what should we fellow cash flow investors do to protect ourselves and to keep from having to lose a property or worse, the nightmare of having to start over?
I, for one, opt to “stay the course.”
Here’s how I see it.
What would be the point of my bailing out of my investments now? In real estate I still get to take depreciation and have some tax benefits. Should I have less than four investor loans, I could still try to get a new bank loan or a refinance one of my existing investor property loans; I could learn the private lending arena and develop a few alliances; I could try to renegotiate with my current lender if I am upside down (owing more on the property than what it is worth today) and see if the lender will renegotiate with me instead of risking a foreclosure; I could try to partner with another party on an equity share arrangement.
Seems like there are options out of this dilemma if you are a problem-solver.
Financial professionals are telling investors to not panic; this is the same message I have for you. Do you want to ruin your credit, lose an asset that may come back someday, and lose the potential tax enhancements only real estate can provide?
I don’t have a crystal ball to predict when the market will turn. History repeats itself—what goes down comes back up and vice versa. Right now things are down, but to panic at this point risks the chance of jeopardizing our positions and our futures.
Some people will have no choice, those who bought at the high end of the market and have no equity can try to exhaust some of these ideas, but may still not be able to get out from under. My point here is if you are in a position where you are facing some heavy decision making about your investments and your strategy, take heart, step back, assess your situation from a business standpoint and do what you have to NOW to improve your financial situation without having to go into further debt or take any unnecessary risks.
For those of you who are still buying, now is a great time for real estate…if you are prepared to muddle through what’s out there.
An informed investor makes decisions with their head. An emotional investor makes decisions from the heart. I encourage you to use both!
January 28th, 2009 at 1:33 pm
I enjoyed your article. I read an article in Forbes online last week that buyers have driven up the number of homes purchased in certain areas recently, such as Las Vegas. The city and state where your property is located is such a factor here. Selling a property at a loss and buying another, similar property may be a good tax strategy for some investors, although financing may be difficult to obtain for the replacement property. It also seems that rental properties will be at an advantage since there will be fewer home buyers now.
March 11th, 2009 at 6:30 am
[...] Should you “Stay the Course”? [...]
March 16th, 2009 at 7:50 am
Thank you for your email. It is difficult to get financing in this market. i continually look for private lenders who want to make loans secured by the investment property. There seems to be a market of investors who don’t want to actually own the real estate so going the loan route makes sense to them. most of the people that i have run into that do this have purchased investment real estate in the past.