That Winters coming post really got me thinking. I keep waiting for the other shoe to drop, but now I'm starting to see things slowly get worse, not quickly. The foreclosure and default levels are now at all time highs. 1 in 8 American homes is in default. I have a few buddies in the contracting, landscaping and asphalt business. They just can't find work, or are working so cheap to get the job it almost isn't worth it. One of them just fell 90 days behind and just got fired.
On the flip side(pun intended) I have another friend that has successfully flipped 5 homes this year. Each flipped for a decent profit. I know there will be any money to be made in the car business the next few years. There are wants and needs, and people are only spending on needs right now. If you have a car you don't need another one. I hope to be out of business by October.
The government scares me. The things they are doing is only going to stretch out the pain. Cap and Trade, and the health care reform is going to pinch small business in a big way. It will cost millions of jobs. Obama playing "Rob in da hood"(Robin Hood) Taxing the rich to give healthcare to the poor will backfire miserably. Over taxing the rich will cause further investment decay, and possibly the wealthy and their businesses to leave the country all together.
The stock market is sideways, and more cash is on the sidelines than ever. The only way to get a mortgage is through the FHA, other than that banks just aren't lending. Hell you can't even get a credit card, a 5000 dollar personal loan, or lease a car. Until lending comes back we are dead in the water. I see the downward spiral continue for another 3 or 4 years, and an overall crappy economy for the next 10.
I think buy and hold, reasonably low to mid grade rentals the way to build wealth. You need to buy cheap enough(which at 50%LTV you can right now) to be able to undercut your competition, because rental prices are coming down. Household startups are at an alltime low. Kids coming out of school can't find jobs and are just chillin with Mom and Dad. I think that banks are starting to get reasonable enough that you can buy a few flips as long as you can sell below market, and stay under 200k purchase prices. The market may be slow but people are still buying if they see a perceived value.
I would love to hear other peoples comments on where they think this trainwreck is headed, and what they plan on doing to profit from it. I think the next 10 years will be the best time to be a contrarian Real Estate investor, both on the flip and buy and hold side. I think it will be harder than in the past, and you must be willing to play the landlord game for the next 12 to 15 years before you can sell for a big hit. I also think that learning how to short the stock market, and learn how to option trade a sideways market will be good income streams. The next thing I need to do is have a low overhead cash flow business. Possibly home inspections, especially with the cap and trade inspections coming. What's your thoughts on the trainwreck, and what are you doing to profit from?
Going to have to disagree with you, Bottom Feeder...there is no money to be made in cars at all...we have a MASSIVE oversupply of vehicles to the point that there are new cars waiting on the shores that dealers cant even put on the lot right now. The President has it right on this one..many if not most of the jobs lost in Detroit will never come back. Being in the car business is not contrarian, its a bad move.
ReplyDeleteUsed cars, much like alcohol and porn, were thought to be recession proof. They're certainly not deflationary recession proof, as the evidence is bearing out. Real estate is a good buy if you buy it cheap, can cash flow at least 300 per unit in 2010's market (which means a lowered rent and increased vacancy). Problem is, people are not buying cheap enough or not pricing them for lowered rents.