I love to read.

I remember in 2nd grade getting in trouble for being late to dinner because I was on the last chapter of Little House on the Prairie and there was no way I was not going to find out how thestory ended. These days most of my reading is business, finance or real estate related, although occasionally I make time for the latest James Patterson or Harlan Coben release.

A few weeks ago I came across a blog post by Steve Harney, entitled, "Long Term Investors are in for a Bonanza". Here's the intro:

"More millionaires were created as a result of the Great Depression than at any time in the nation’s history. Noted rich-guy John D. Rockefeller has said, “The way to make money is to BUY when blood is in the streets.”  Another noted rich-guy, Warren Buffet, believes you should “be fearful when others are greedy and to be greedy only when others are fearful.”  Huge success comes to those who see confusion as an opportunity. Today, there is a significant opportunity"

For the last year, I have watched many people maneuver to take advantage of the opportunities created by the downturn in the market. Personally, my husband and I negotiated a terrific deal on the building my RE/MAX office had been leasing. my office building....something which probably wouldn't have been possible 5 years ago. 

Let's look at some of the reasons this is a great time to invest:

  • Today, it's possible to buy an investment property with 10% down, although 20-25% is more realistic and offers the best rates (still in the 5's!!).
  • Rental rates are very good and tenants are looking for long term leases.
  • In years past it was nearly impossible to lease for more than your mortgage payment....not so now
  • Due to the credit repercussions of short sales and the longer-term ones of foreclosure, the rental market looks stable and strong for the next 5-7 years while the market recovers

An example cited in Steve Harney's post goes as follows:

Let’s Look at an Example

Buy a home for $200,000, expend $50,000 for down payment and closing costs, and have your monthly carrying costs covered by rent. If you sell the property in 15 years for $400,000, you did not double your money, you had a 400% return on your money (because you only used $50,000 cash to get your $2000,000 profit). The fact that you can leverage real estate is how fortunes are made.  If you could cover your expenses through rent payments received, and leverage your cash invested at a 3:1 ratio, WHY WOULDN’T YOU EXPLORE THIS STRATEGY TO BUILD YOUR FUTURE NEST EGG FOR RETIREMENT???

It's a great argument. Now we just need to get over the fear of taking action and seize the opportunity that's right in front of us!