Thursday, October 2, 2008

Politics aside

· In this current marketplace, how does a 100% return on an investment sound and …
· Separating Facts from Myths.

Monday, September 29th, 2008 was the biggest drop on Wall Street in its history.

Tuesday, September 30th, 2008 was the third largest gain on Wall Street in its history.

The stock market’s volatility is directly impacted by “speculation” … is the economy going to improve or not, is unemployment going to go up or down, is the price of oil going to increase or decrease … and the list goes on and on. In the course of one day, records are set, as proven above.

Some Important Facts:

Mortgage loans are still available in abundance to the qualified borrowers.
Even though interest rates have increased slightly, FHA, VA, Conventional, and Jumbo loans are at historical lows.

Politics aside, Dave Ramsey, a popular Radio and TV financial advisor, was interviewed last night, September 30th, on Fox News Network, CNN, CNBC, (amongst others) and was asked: “In this current market turmoil, where would you advise people to invest their money?” He said, without hesitation: “The real estate market. There are great buys out there. There is an abundance of money available for those who qualify (have you heard that before) and the rates of return, purchased wisely, can be remarkable.” reports:
Starting in 2010, housing price appreciation in metro Albuquerque is projected to lead the nation, due to job and economic growth, along with other factors. Housing starts are anticipated to increase by 26.6%, with single family increases of 26.4% and multi-family increases of 27.1%. How that correlates into overall market appreciation is not certain, but it can’t be a bad thing.
Money will be coming into the metro economy from baby boomer parents who move once the last child departs the nest. Albuquerque placed seventh on the list of cities attractive to this target group, due to our outdoor activities, arts, and moderately priced homes.

∙ Now to the scenario of a 100% return on our investment …

If someone were to buy a $200,000.00 home and elected to put 10% down, their investment would total $20,000.00.
Let’s say that the Forbes start “speculation” (remember that term in my opening bullet point) is overzealous and a more conservative “market appreciation” (not 0.00 % … not 26.4%) … let’s say … 10.00% (for this example).
That $200,000.00 home is now worth $220,000.00. ($200,000.00 x 1.10% = $220,000.00.)
Again, you invested $20,000.00 … in the course of 1 year … you earned $20,000.00. My math = $100.00% return. If accurate …Not bad, if you ask me.
The bonus…every day they can enjoy owning their new home (and that is FREE)!

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