正文
Positive cash flow? It's nice to have it, but in many areas such as NY/NJ and CA, it's extremely hard to find a deal that has positive cash flow. Even if you look hard enough and find a deal that seems good initially, you might have to pay a lot for repairs&maintenance and the rent could go lower in the near future if the economy continue to contract.
Then, when to plunge into the market and buy?
I think the most important signal to watch is the inflation vs. mortgage rate. Although the current mortgage rate is near historic lows, the current inflation is negative. There's deflation going on. Wait a little longer and you will be rewarded for your patience.
Things can't be kept in this way forever. The current deflation is abnormal! At some point in the near future, maybe late this year or early 2010, the inflationary pressure will finally win and we will see a gradual but huge increase in the prices of everything, as well as basic salaries. Once you see inflation picking up, go buy as many real estate as you can afford(the monthly payment I mean) and putting down as little as possible(at that time banks may still require 20% down, the 0% down deals might be gone forever). There's usually a lag between the inflation picks up and the FED raising the rates. You need to plunge in that time window, get the lowest fixed rate.
Most people invest in real estate not because they want to collect the little rent but rather they want to hedge against the inflation. Unlike the stocks or currency trades, there's no margin call! As long as you can afford the monthly mortgage, insurances and taxes, there's nobody going to take that property away from you. So real estate is safer than stock investment and if managed properly, it can give you a healthy return in the very long run(only during stable inflation period. If the economy continue to contract and deflation wins, ALL BETS ARE OFF! Do NOT buy real estate in deflationary period!!!!!!!).
Then, when to plunge into the market and buy?
I think the most important signal to watch is the inflation vs. mortgage rate. Although the current mortgage rate is near historic lows, the current inflation is negative. There's deflation going on. Wait a little longer and you will be rewarded for your patience.
Things can't be kept in this way forever. The current deflation is abnormal! At some point in the near future, maybe late this year or early 2010, the inflationary pressure will finally win and we will see a gradual but huge increase in the prices of everything, as well as basic salaries. Once you see inflation picking up, go buy as many real estate as you can afford(the monthly payment I mean) and putting down as little as possible(at that time banks may still require 20% down, the 0% down deals might be gone forever). There's usually a lag between the inflation picks up and the FED raising the rates. You need to plunge in that time window, get the lowest fixed rate.
Most people invest in real estate not because they want to collect the little rent but rather they want to hedge against the inflation. Unlike the stocks or currency trades, there's no margin call! As long as you can afford the monthly mortgage, insurances and taxes, there's nobody going to take that property away from you. So real estate is safer than stock investment and if managed properly, it can give you a healthy return in the very long run(only during stable inflation period. If the economy continue to contract and deflation wins, ALL BETS ARE OFF! Do NOT buy real estate in deflationary period!!!!!!!).
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