From the looks of it, we are merely in the calm eye of the storm for real estate. Banks are holding onto a ton of inventory. 6.7 million homes (11%) are delinquent and the biggest set of arms are due to adjust next year. We are no way out of the woods yet.
So the question, how to prepare?
Here's a plan that I am seriously toying. Mind you I am small time investor. I am looking at selling my own home, and both of my rentals. I am then looking into placing the cash into silver until we near the bottom of the next drop.
Reason for silver is it is very undervalued. There are currently 1 billion ounces available while there is 5 billion ounces of gold available. The Gold/Silver ratio has traditionally for the last 5000 years had a ratio of around 20 to 1. Only in the last 60 years has it changed. It is now currently 58/1. Also, silver has far more industrial uses then gold and is very difficult if not impossible to retrieve after use. If silver regains even 30 to 1 with gold, it would go from $17.9 per ounce to $30 an ounce. Not a far stretch. I don't expect it to drop to much either. Lots of MSM stuff shouting about the failing dollar and the value of pm's to keep the price up.
I also don't like the idea of holding my money in the failing dollar while waiting for the next bottom of the housing crisis. We all know inflation is coming, its just a matter of when. Lets pray it won't get to hyperinflation.
If housing drops even another 20% in my area, I expect many homes to sell for 40-60k in my area of concentration. This is also not a stretch, as many sold for this price last year. I would be able to pick up around 6 rental properties with the cash generated from the sale of my homes.
I do expect rents to start dropping in my area, but I don't expect them to drop to half. Currently in rougher neighborhoods a 700 sq 2/1 rents for $700-$900. Those are the same houses that will be going for 50k. With 20% down a 40k mortgage even at 8% with insurance and taxes will still be $450-500. I think I can set my self up pretty good going into the next few years.
Ok so that my rough plan I'm considering atm. Do any others have a plan to prepare for the next crunch. If so what?
So the question, how to prepare?
Here's a plan that I am seriously toying. Mind you I am small time investor. I am looking at selling my own home, and both of my rentals. I am then looking into placing the cash into silver until we near the bottom of the next drop.
Reason for silver is it is very undervalued. There are currently 1 billion ounces available while there is 5 billion ounces of gold available. The Gold/Silver ratio has traditionally for the last 5000 years had a ratio of around 20 to 1. Only in the last 60 years has it changed. It is now currently 58/1. Also, silver has far more industrial uses then gold and is very difficult if not impossible to retrieve after use. If silver regains even 30 to 1 with gold, it would go from $17.9 per ounce to $30 an ounce. Not a far stretch. I don't expect it to drop to much either. Lots of MSM stuff shouting about the failing dollar and the value of pm's to keep the price up.
I also don't like the idea of holding my money in the failing dollar while waiting for the next bottom of the housing crisis. We all know inflation is coming, its just a matter of when. Lets pray it won't get to hyperinflation.
If housing drops even another 20% in my area, I expect many homes to sell for 40-60k in my area of concentration. This is also not a stretch, as many sold for this price last year. I would be able to pick up around 6 rental properties with the cash generated from the sale of my homes.
I do expect rents to start dropping in my area, but I don't expect them to drop to half. Currently in rougher neighborhoods a 700 sq 2/1 rents for $700-$900. Those are the same houses that will be going for 50k. With 20% down a 40k mortgage even at 8% with insurance and taxes will still be $450-500. I think I can set my self up pretty good going into the next few years.
Ok so that my rough plan I'm considering atm. Do any others have a plan to prepare for the next crunch. If so what?
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