I’ve been sayin’ for quite awhile that real estate investors are in the middle of the perfect investment storm. Don’t take it for granted.

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Transcript:   The last several years, as far as real estate investors are concerned, we’ve been experiencing what I call the perfect storm in a very positive way. Let me begin by going into the way back machine. I got licensed in the early fall of 1969 as a know-it-all wet behind the ears 18 year old. The interest rates were in the upper single digits, they went from about 7 to 9. Right now, we’re nowhere even close to that even for investors, and investors will usually pay 0.5% to 1% higher than owner occupied borrowers, home buyers. What’s happened in my 32 years beginning, was that I never say an interest rate ever for a home buyer that began with a number lower than 7. Think about that. Over 3 decades I’m in the business, I go from being barely out of high school. I go through college. I meet Mary, my wife, we have a family. We move a few times. I am at this point, I am now over 50 and I finally see an interest rate that starts with a number less than 7. I didn’t know how to act. Then you take where we are today. Although they’ve gone up a tad, my investor clients are now locking in investment loans fixed for 30 years in the high 4s and low 5s. They can put 20%, 30% down on various properties and get pretty decent cash flows, so they have enough money instead of in the old days buying one 2 to 4 unit property or maybe 1 rental house. They can buy 2 or 3 more because of the down payments that are possible due to the low cost of money relatively speaking. Now, add to that, that the rents are going up while the prices have taken a huge hit because we all know, when the bubble burst back in late 2006, early 2007 and it really, really became the valley of death for owners who bought at the top all through 7, 8, 9 and even in 10, and we all learned what upside down meant. That meant your loan had more owed than your property was worth. Well, imagine if you’re just buying now as an investor and you can get a rent-price ratio that is give or take 1%. What that means is take the rent per month that that property you’re looking at generates, divide it by what you’re going to have to pay for it, and if it’s about 1%, maybe a little above it, maybe a little below it, man you’re good to go. I never saw that as 20 years old. In San Diego, we had properties that were renting in 2006 for 30,000 a year, $2,500 a month, and they were selling for over $550,000, $560,000, $570,000 and people were paying it. By then, I had been long gone. I left San Diego on the spring of 2003, but my point is this, here’s the perfect storm. You have rent-price ratios reminiscent of the ’50s and ’60s all over the country, and especially in really nice places. We’re able to buy in neighborhoods that you would put your 80 year old grandmother to live alone and get those rent-price ratios and pay this historically low interest rate to get them, and you can buy them so they’re not a century old. I talked to a guy from New Hampshire the other day. He was real happy. The latest duplex he bought was only $110,000. My point is this: the perfect storm of low interest, a really attractive price-rent ratio, rent-price ratio, the fact that those values are so down now that the stuff, for instance in Texas where I really like, things that in San Diego are 60 years old, the poster duplexes and four-plexes for functional obsolescence are selling at a cut rate value of $400,000, where you can get a much better location, a way better and far superior rent-price ratio and pay 25% to 45% less in taxes, and other places around the country too that are good markets,