Do you own a real estate investment property? Your best options for surviving the real estate bubble

Our company receives many calls from condominium investors and pre-construction contract owners looking for easy cash. The client asks, “What should I do?” He wants to know.

Although each situation is unique, in general the decision can be calculated by calculating the value of future cash flows in the present. In other words, translate each strategy into a series of cash flows today and in the future, and discount each cash flow now using the appropriate discount rate to arrive at a net present value for each scenario. This combines time value and decision tree concepts and helps transform an emotional decision into a rational financial decision.

Let’s look at the simplest strategy for analysis – Walk Away. If the sale of the property doesn’t cover the mortgage balance, you’re locking in a loss on your initial investment, not to mention the possibility that the mortgage company will come after you. To put it mildly, it is an undesirable strategy and an absolute last resort choice.

Without knowing your personal situation, I can tell you that there are many effective options that can help alleviate your situation. Please contact us for a free, no-obligation consultation and we will be happy to explore the best options with you.

  1. Sell the property – You may feel that you have to sell today. Negative media and an overinflated real estate bubble have contributed greatly to investor psychology today. Not to mention the hassles of being a landlord. Or rent out the room while you attend to your millions of other tasks and jobs.

Maybe the property has a very negative cash flow and the monthly losses are bleeding your finances and savings. You feel like you are sinking into a money pit and your net worth is plummeting. Here’s How Your Cash Flows Line Up – If you’re in a hot market, expect to make a significant discount to get fair market value for what you’re getting. In other words, lock in a 10-20% discount on the price you can get if you decide to ride this correction.

A word about cycles. At the top of the cycle, things are rosy and forecasts are that prices will continue to rise indefinitely. We saw it last year. Likewise, it is difficult to imagine that inflation will rise again today and that real estate will remain depressed for many years. The reality is somewhere in between. Prices will bounce back, it’s not a matter of when. In terms of negative sentiment, we’d like to say we’ve seen the worst of the correction.

The strategy of selling your property also has an element of hope. Even if you are desperate to sell, there is no guarantee that you will sell. The reality of selling has to do with how low you have to go to bring your price. But also think about this, Californians who sold their properties down in the last correction have lived through the day as property prices exploded over the past 10 years, rising roughly 2-3 times over that period.

  1. Last option – hold and high – When considering a hold strategy, the investor assumes that the market will soon get better. Most experts predict that the current inventory glut will take until Q4 2007 to reach a normal market.

How long you have to hold it depends on the amount you buy. The old saying in real estate is that the profits are made in the buying, not the selling.

Along with the mortgage option, you should get a financier to assess your finances for the property. Can you withdraw equity, lower your interest rate, defer mortgage interest? Each can help lower your monthly expenses. Our company has investor programs that other companies offer. And if we can’t help you, we’re tied to a national network of investment loan advisors who certainly can.

Second, your mortgage decision depends on the demand for real estate in the area you’re buying and the condition of the property. Buyers are moving to the area, incomes are rising, the rental market is strong, there is job growth and what are reasonable expectations for the market?

If you want an in-depth and honest analysis of your unique situation, contact us. We can help you make informed decisions and improve your financial situation. If you are in financial trouble, contact us immediately. We can help you design a strategy that not only protects your investment, but also sets you up for a bright financial future.

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