One Man’s Recession Another Man’s Treasure? Does that even sound possible? We all know the U.S. Economy is in the dumps. Real Estate values have lost upwards of 40% in some markets, major financial institutions have been completely wiped clean from the face of the planet, and most likely someone you know has already lost a job or is fearful of the possibility.
Even with all of this commotion, amidst the brewing economic storm I decided six months ago to go out and purchase my first home. Am I crazy? I don’t think so. I am fortunate, some may even say lucky, myself included, but I don’t think I am crazy.
I have wanted to invest in real estate for as long as I can remember. All throughout college I was scheming for ways to buy a run down rental on campus to rent out to my friends. Thank God that never happened! I would be in a world of hurt today.
I graduated from Michigan State University in December of ‘06 and was on the prowl to pick up some real estate as quickly as possible. As it turns out I would have purchased at the absolute peak of one of the largest real estate bubbles in recorded history, in the state of Michigan no less which has it’s own host of troubles going on.
It was the end of June 08 when I finally got up the courage to make an offer on a condo in Chicago. On the 4th of July, my offer for $105,000 was accepted for our two bedroom condo. We moved in on August 31st after a month and a half of mis-communication, careless-ness, and general bureaucratic disasters.
In order to secure a mortgage we needed to get the condo appraised. When the appraiser sent over his report, I had to call him to make sure that he had the correct address and wasn’t mistaken. I was astounded, he appraised it at $185,000. I knew I had done my due diligence, but still, I couldn’t believe that our condo would appraise for that much.
Fast forward to a few weeks ago, I was doing some market research to appeal my real estate taxes and found a number of comparable 2 bedroom, 2 bath properties that were sold within 30 days of my purchase for upwards of $250,00 dollars, 2.5X my purchase price. As it turns out the appraiser was about dead on!
As the rest of the Economy is following the real estate market into the ground, the powers that be have tried to jump start the market by dropping interest rates to nearly 0. Mortgate rates have been extremely volitale as of late, but in general are falling. I am patiently waiting for the right time to take this opportunity to refinance my mortgage, ditch the PMI, get rid of my 7% interest rate, and use the equity I have built into my condo to pull out a large chunk of cash.
My goal is to take that cash-out and use it as a down payment to capitalize on another diamond in the rough before the real estate market makes its turn around. By purchasing a property before the bubble completely popped I was still able to get an incredible price on my first condo, hopefully leaving me enough time to squeak out a deal on a second investment property before the buyers market goes out the window, and we end up in another real estate bull market.
Tagged: bull market, interest rates, investment property, mortgage rates, Real Estate, real estate bubble, real estate market, real estate slump, refinance, refinancing