« Market Update & Personal Finance Suggestions | Main | Listen Up! »

Recessionary Blues Suddenly Look Pink!

This for sure is a time to reflect on the changes in the market over the last year.   We have gone from boom time to a serious recession.  To be sure, this year has been an interesting and challenging one for investors, with all the wild fluctuations in the market and the global economic crisis threatening to strangle virtually every economy on the globe.  

For many years, (since approximately 1992, in fact), the western world has enjoyed an exuberance of value, an oppulence of spending and a carefree attitude towards credit and fiscal responsibility.   There was what can be described almost as a buyer's frenzy or buyer's mania, where we thought nothing about the impact of such 'freedom buying'.   Things have clearly changed.
Many of you might recall the many months ago, I issued a warning with respect to the upcoming and imminent corrections (through the newsletter) citing beginning and slight agitation in the market, the warnings of financial gurus and a variety of other factors.   Let's review for a moment what's happened since then.  
There has been a dangerous plunge in housing value not only in the United States, but also in western Europe.   There's been a credit freeze almost worldwide, which the Innisfil group can attest to has filtered down to the little guy.   There's been drastic plummets in the values of commodities and stocks.  There have been massive governmental bank and auto bailouts (and outright failures) across the broad chest of our important trading partner to the south.  I know it sounds a little petty, but even I was shocked into reality (although I had seen and recognized these symptons long since) when I heard our very own Conservative PM encourage the idea of 'deficit spending'.  
Well, we all know the basic facts now.   If we haven't protected ourselves in the past few months, then we ought to learn a lesson - and remember these signs the next time they occur.   In the meantime, as my grandmother used to say, "there is no use crying over spilled milk - just clean it up on your own, then get on with your day".  What are we to do now?
I guess the big question to ponder is this:   is real estate still the best option for investors?   My answer is unequivicably:  YES!   In my personal situation for example, my home will likely drop in value, my income from school will drop even to a more serious negative cash flow position (with two families who've lost jobs as of early January, and likely few new prospects given the economy) and any equity property I have will siphon badly needed cash from my pocket, unless I can figure out how to make the equity properties into cashflow properties.  Actually, almost all of my equity properties also cash flow (at least to some degree - and some to exceptional degrees).   But what about my land purchases?  
They're still sitting there and will likely drop in value, but it doesn't matter because the maintenance on them (financially) is very low.   The big clincher though, is what about my cashflow properties?    THEY ARE STILL CASHFLOWING!   This is the best thing about cashflow real estate: even in a crisis market, you can still find a way to make it work.   And, if you have any cash base at this time and going forward, it is definitely the time to buy!   With prices dropping by the minute it seems, and the Bank of Canada doing its best to protect the economy by dropping interest rates, this is the time to buy if you are buying for cashflow.  Consider this:   the money from my cashflow properties still came in this month!   That's what RichDad's Robert Kiyosaki is talking about....(www.richdad.com). 
Let's look at this market as opportunity 'cause that's what it is.


TrackBack URL for this entry:

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)