The Great Depression: A Time of Great Opportunity!
Thom Mahan, Real Estate Investment Expert
Did you know that more millionaires were made during The Great Depression than in any other period in U.S. history? Forbes Magazine says "10 million millionaires will be created by the year 2016." So what are the most common traits of the wealthy? They reject conventional wisdom. They understand the simple and powerful truths of money. And often times, their greatest successes were birthed out of adversity. They are ordinary people just like you and me!
Most people will try to ride out the current economic crisis by simply keeping their heads above water. Many of these individuals and families will be able to tread water for a year or two but will eventually drown in a sea of debt. However, a select few will look beyond the crisis and seek out the many opportunities that are currently being created.
One of these opportunities is in Real Estate Investment. There are areas across the United States where bank-owned properties are being sold for pennies on the dollar. And these are not a small percentage of the available properties like in years past. In fact, more than 50% of the single-family homes sold in Arizona are bank-owned properties. Literally tens of thousands of homes in the greater Phoenix area will be sold for a fraction of the appraised value. The median single family home price in metro Phoenix fell to $130,000 in January 2009, according to local MLS data. At $130,000, the median home price in metro Phoenix has fallen 51% from the peak price of $264,800 in June 2006. MLS data also shows that there are over 3,000 two-four bedroom homes listed for $50,000 and less.
So how can you take advantage of these once in a life-time opportunities and become one of the next members of the Forbes List of Millionaires? My first suggestion is don’t try to do it alone. Find a solid team of real estate experts that can put their talents to work for you. The team should consist of a top-notch agent, appraiser, inspector and property manager. I am a proud member of the Real Estate and Beyond team here in Phoenix. The team is made up of honest, hard-working members that place the needs of their clients above all else.
Once you have selected a quality team that can assist you in accomplishing your financial goals it is time to design a strategy. In the past, you were able to design a stock portfolio that balanced low-and high-risk stocks to achieve your goals. Not anymore though, Wall Street has let us down and the average investor will not get involved with the stock market for several years. Real Estate has become a much more stable and attractive way to realize your financial security.
Here’s just one example of how to make the real estate opportunities in the Phoenix area work for you. Let’s say John and Mary Smith have $50,000 available to invest. They can place it in a savings account and earn 2% interest, invest in the highly vulnerable stock market or invest in real estate. They decide to go with real estate because of its solid security and potential. Mr. and Mrs. Smith purchase five homes in the Phoenix area for $50,000 a piece. They put 20% down on each property and finance the rest. Here is how their monthly financial report breaks down
Mortgage Principle and Interest at 6% = $239.82
Taxes and Insurance = $85.00
Property Management = $75.00
Maintenance = $60.00
Total for all five properties: $2,299.10
Average rental rate for a 3 bedroom home = $850.00
Total for all five properties: $4,250.00
Monthly Profit: $1950.90
Annual Profit: $23,410.80
The best thing about this strategy is that the renters are not only generating income for the Smith’s, they are also paying their mortgage for them. Their goal will be to hold onto the properties until the housing market rebounds, which historically always has. In approximately five years they will sell the homes on average for $125,000. Here is how the Smith’s five year investment breaks down:
Investment = $50,000.00
Remaining Mortgage = $189,926.20
Profit from rentals over five years = $117,054.00
Revenue from sale of five homes = $625,000.00
Total Profit: $502,091.80
By investing conservatively in the Phoenix real estate market, Mr. and Mrs. Smith made over half of a million dollars in just five years. These estimates were made using extremely conservative figures just to show how incredible this opportunity really is. And remember, you don’t need to have $50,000 like the Smith’s did. Anyone can begin acquiring property in this market for much less and take advantage of this opportunity. For more information and to see several of the properties currently available in the Phoenix market visit us at http://www.bargainpropertynow.com/. Whether you decide to use the services of my team or not, I wish you and your family all the happiness and success in the world.
"Prosperity & freedom is yours, if you want it!"