Government Spending Sprees Can HELP Real Estate Investors

In the era of big bands, Lucky Strike cigarettes, and fighting Nazis, port cities around the world could rely on Yankee sailors to generously spend their wages in the many taprooms and rathskellers that prosper there.  The old adage, “Spending money like a drunken sailor” found its well deserved origin as the boys of the Greatest Generation pulled their customary tours in the US armed forces.

In this era, we have our own form of the drunken sailor; namely the United States congressman who is merely a reflection of the United States citizen.  Congress has finally spent itself into disaster, and few have the fortitude to do what has to be done to save ourselves.

That’s the bad news.  The good news is that those of us who invest in Real Estate for the purpose of making rental income can make a killing.

Interest rates are going to skyrocket.  Don’t take my word for it.  Just ask the Chairman of the Federal Reserve, Ben Bernanke.  The basic reason is that we’ve been printing funny money to pay the interest on our massive debt.  As more and more cash hits the market, inflation happens.  As anyone alive in the late seventies and early eighties will tell you, those conditions mean interest rates in the double digits.

Interest rates are at historic lows right now.  The conditions have never been better to own rentals.

By acquiring rental properties at low interest rates, the investor is shielded somewhat from falling prices.  The days of break even rentals will be over as rate increases make payment levels increase by hundreds of dollars on the same amount borrowed.  The $200,000 home will require a $2000 monthly payment from the borrower as opposed to the $1400 monthly cost now.

Rents typically increase proportionately with the borrowing cost of purchasing.  Those who purchase rentals now will enjoy a rapidly increasing cash flow as rental rates increase.  Also, folks with stellar credit ratings will pounce on an owner financing opportunity at 10% rather that the 15% banks will offer.  Those who finance now at 5% will be setting pretty.

If you want more information on how this will work, call me today.