Recent news about the US debt downgrade, the subsequent market turmoil, flow of capital into treasuries, and commitments by the Federal Reserve to more easy money are creating an unprecedented opportunity for income property investments. The stock market is becoming more volatile, and home prices are in the midst of a secondary slump. For people who own property that they are counting on to appreciate, this is highly destructive. However, for people who are purchasing property to rent out to tenants, this is the equivalent of handing out free money to investors.
Affordability is at record levels, but financing is still so tight that most people cannot take advantage of the exceptional deals. This is serving to suppress prices and is creating an expanded window of opportunity for astute investors to act. It is most certain that this window will not be open indefinitely, since continuing deficits will eventually force up yields on government debt.
This means that now is the time to step into the fray and scoop up these investment opportunities while they are available. It is only a matter of time before global economic forces close this historic windfall for investors. Borrowing costs cannot stay low indefinitely, and property prices cannot stay suppressed indefinitely. At some point, the other shoe will drop. Now is the time to take action.
Move it or Lose it
The continued economic downturn has left many with a feeling that the doldrums of depressed real estate prices, and low interest rates will last indefinitely. However, it is most certainly true that nothing lasts indefinitely. Growth phases do not last forever, and neither do downturns. There are many indicators pointing toward a slow and elongated economic recovery, but there are just as many indicators pointing toward a rapid escalation of interest rates when the enormity of the US government’s financial irresponsibility is fully internalized by the marketplace.
At some point, investors will cease to accept low rates of return on US treasuries that are being de-valued by government policy. When this happens, it will vault interest rates upward and be amplified by the additional borrowing necessary to finance the continuing government deficits. The window to act where both prices and interest rates are at historic lows is open right now. There is no way to know when this window will close, but when it does, it will close fast. Make sure that you take action before the opportunity of a lifetime passes you by.
The Jason Hartman Team
