Greetings!

This week's event should be very interesting, whether you have money or want money. Get an inside look at how local investors are making huge profits either borrowing or lending hard money.  See details below.

Hope to see you there!

Kathy and The Real Wealth Team

Financing

You probably know by now that the Fed raised its discount rate on emergency loans to banks by 0.25%, to 0.75%. The discount rate is not the Fed funds rate and the central bank said the increase does not "...signal any change in the outlook for the economy or for monetary policy...."  However, some analysts feel the Fed move was an attempt to appease inflation "hawks" who fear that a new bubble is growing as a result of all the "free money" to banks.

Investors are still locking in 5.5% interest rates on 30 year fixed loans. I think we can all agree that we will see serious inflation over the next 30 years, yet your fixed rate will not change. In 10 years, your payment will feel like half of what it is today . Rents will go up with inflation, but your payment is locked. What a beautiful deal.

Our lenders in Birmingham, Indianapolis and Dallas can finance up to 10 properties! Get a free quote from one of our preferred lenders.

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The Market

A few years back, a member from our network urged me to consider working with a group up in Sacramento that made pretty stellar guarantees to its investors. After reviewing their offering, we denied it. Sure enough, several years later, that group has been charged by the SEC for defrauding investors.  http://www.sec.gov/news/press/2010/2010-24.htm

Why did we turn that "golden opportunity" down? First of all, the properties were in California, and all our research showed that CA housing prices were way out of whack in comparison to incomes at that time. We knew an adjustment was coming.

Second, there were guarantees - guarantees of a certain appreciation rate, guarantees of rental income and guarantees of a certain return. This is real estate. There are no guarantees. You can do many things to mitigate the risk by buying right, but anything can happen... And it did.

Third, too much control was given to the managing partners. That made me nervous. I like to be in control. Just ask my husband. And that's why I like real estate as an investment.

Tags: California, due diligence, federal reserve, Inflation, Interest Rates

This entry was posted on Monday, March 1st, 2010 at 12:00 am and is filed under The Real Wealth Report. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.