Business advice


Will real estate ever be a good deal again?
October 30, 2008, 2:25 am
Filed under: Business Advice

If you are considering buying despite the mess the market is in, here are some facts to consider.

Real estate for the ordinary buyer, home owner, has always consisted of many variables even in the best of times.

Are you buying for the simple reason of watching your property increase in value? If so, t hen this is not a time to buy, no matter who you are. No one, currently, according to the latest coverage, knows when the prices will start rising. The only positive note I’ve seen is that sales are starting to inch up again. This happens any time prices drop like a lead balloon.

There are some benefits one gets for being a homeowner no matter how bad the market. These are the tax breaks that come with the package. All home owners pay property taxes. They don’t look forward to that time of the year. However, those taxes are an income tax deduction. Also during this time, with property values declining, property taxes are also declining. Interest on your mortgages is deductible for the time you own your home. When considering these factors, you can see that the true cost of staying in your home is less than you probably thought since a portion of it is refunded by the government at the end of the tax year.

There will definitely be some good deals available during the period of the downturn. The point, however, is to make sure you consider more than the current price. You need to consider the condition of the neighborhood. A good portion of appraisal information comes from what’s going on the area. What has the price been of similar properties close by? You want to compare similar properties in size of the building as well as the size of the property it stands on. Area realtors will be able to get this information for you. The exact term is ‘comps,’ referring to comparable to properties.

However, if you search the area you are considering and find nothing but foreclosures, then you are barking up the wrong tree. This means that not only are no homes selling in the area, but there is a good bet that there will be more foreclosures. An area blighted with foreclosures adds to the deterioration of other properties  value close by.

Another current problem is that foreclosed homes, if you are really after an alleged bargain, many may not have clear titles. This is something that should be researched thoroughly before putting down any money.

So, it boils down to real estate can still be good for you, but it depends. It depends on whether or not you need a profit in the next five years. It depends on whether or not you can be happy with just the tax perks that come with owning a home until the real estate market starts to look like something we can recognize as semi-normal. It also depends on whether or not you have done the proper research before plunking money down to open escrow. It also depends on whether or not you could keep the payments current if interest rates went up. And, if either you or your partner lost their current employment, do you have a plan B that would keep the mortgage payments paid.

So, in total, the answer is: it depends on a lot of variables and how much patience you have.

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For more examples of my work:www.bellbusinessreport.com

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The economy, yet another problem
October 17, 2008, 7:11 pm
Filed under: Business Advice

While we can all agree that there is a mess now, the headlines haven’t directed their attention to a major contributing factor. If you check this link: http://www.1970sflashback.com/1970/ECONOMY.asp , it appears during the early part of the 70s decade, the price of a gallon of gas was $.36. It’s hard to wrap one’s mind around that. This is where this economic mess began.

Since the oil embargo goes back over three decades, it makes it hard to find specific numbers to go along with my premise. However, I did find this:

The worst day in Saudi-American relations was Oct. 20, 1973, when Saudi King Faisal joined an Arab oil embargo against the United States. In a matter of days, the global oil market was thrown into chaos. Americans waited in long lines to buy gasoline. Within weeks, the price of oil more than tripled. You can find more details about various international relationships in that time period at: http://community.seattletimes.nwsource.com/archive/?date=20020218&slug=saudi18

Leonard Silk, a deceased columnist for the New York Times and author of several books, labeled this change as the biggest transfer of wealth in the history of the free market.

I realize that none of this specific because the oil market is complex. There are regulations all over the place. We can’t arguably say that the free market is working here because a good portion of it is controlled by a cartel, a monopoly. But it all boils down to one major fact; we need to make a shift out of this market. We have seen small signs of this with hybrid cars along with wind and solar energy.

But there are obstacles to making big inroads. There are the lobbyists that want things to stay the same. If you go to this link, you will see the numbers the oil companies pay to keep things the way they are: http://blog.sunlightfoundation.com/2006/04/27/oil-company-lobbying/ . (These numbers are old, since the blog was posted in 2006.)

I searched for stats on how many hybrid cars are sold and couldn’t find any. That’s rather odd. It just could be because the oil and auto industries, etc., don’t want us to know. I admit that I am a conspiracy buff.

Here’s one, did you know that we have had a treaty with Saudi Arabia since the 40s. It was signed by FDR. We were to protect them in exchange for us having access to their oil fields. Many feel this treaty is one of the main reasons we are in Afghanistan. We can’t chance that someone is going to cut out our access to those oil fields. And, even though no one has come out and said it lately, we know the oil fields in Iraq were a prime concern before we went back in there.

Then, of course, we all realize that the oil business in the U.S. gained just as much as foreign producers when prices started skyrocketing. Added to that is the fact that we’ve had a few Texans (oilmen) in the White House.

If we don’t, as a country, get on the bandwagon to move ahead into alternative energy, then the economy will continue to spiral out of control.

There isn’t one single product we purchase in this country that isn’t affected by the price of oil. Whether or not we are talking produce or raising cattle, at some point, they all have to be shipped to market. It doesn’t really matter that gas at the pump moved down slightly these last few weeks. (There is speculation prices could drop further, but how far is up in the air.) The overall bar for the price at the pump is affecting every aspect of our economy. The only way that is going to change in the long haul is for the demand to go down and stay down. The only way that can happen is if we start using alternative energy big time. This takes the cooperation of business and the legislators.

Isn’t it about time that you made your voice heard. The legislators like getting re-elected. If you aren’t happy with responses you get from them, then it is time for a big change. Make your voice heard and this will be the first step to moving ahead on alternative energy.

Ironically: President Bush set goals of replacing more than 75% of US oil imports from the Middle East by 2025. See more http://forio.com/simulation/oil/

We haven’t even gotten around to the auto industry. Their lobbyists are always fighting to keep things economically efficient for them. We are talking about saving this country’s economy in the long run. If we don’t get on the bandwagon, the future for our children and grandchildren will be very grim.

For more samples of my work: www.bellbusinessreport.ocm.

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