REAL ESTATE: Still The Best Investment Even During An Economic Crisis!

Yes, real estate is still the best investment even during an economic crisis. I have proven that since the Asian Financial Crisis in 1997 and up to now!

Find out here how you can make money in real estate investments even during market recession, just like how I did and continue to do here in the Philippines. The real estate market situation in the US and in other developed economies is not far different from what had happened to us here in 1997.

Massive housing foreclosures and economic recession brought about by the global financial crisis is bad news to many investors and it is more than enough to shake their nerves and scare them from parting with their money - that is if they do not understand what is happening. The key is understanding and knowledge of the current crisis and how it can work to your favor. You indeed can make money in real estate, but before attempting to dip your fingers into the real estate business at these times of economic crisis, it will help you much to understand the situation first so you will have an idea where and when to get into it - and how.

FROM SUB-PRIME MORTGAGE CRISIS TO GLOBAL FINANCIAL CRISIS
This is how it happened: The current global financial crisis started in the US as a sub-prime mortgage crisis. Years prior to 2006 there was a strong demand for housing from individuals and families. This phenomenon is a natural offshoot of a robust economy. Also during those times, banks and other financial institutions had so much excess capital that they were looking for other investment opportunities. Seizing this great opportunity, real estate developers opened several housing developments to cater to the demand. Banks also offered low interest housing loans to make it much easier for home buyers to avail of a home mortgage. Families were able to get decent and affordable homes through low interest mortage which was easily
affordable to pay from their salaries. There was nothing wrong with that scenario, it was just perfectly wonderful.

The time came sometime in 2003 when almost all who qualified for a home mortgage already got one, and yet these big financial institutions still wanted more opportunities but the problem that time was that the qualifying guidelines and parameters to get a home mortgage was so strict that their income and asset levels fall short of the passing mark.

WHEN THE BIG BRIGHT BOYS BECOME GREEDY
It was then when the corporate bright boys and their brilliant financial partners became greedy and changed the rules of the game - loosening up the rather strict qualifying guidelines just to "make more money" - so loose that interested home buyers need not prove their income anymore, they were only required to declare or state them on the pro-forma application forms and show a copy of their bank statement. The SIVA or Stated Income - Verified Assets Loan Program were made available to the market for loans between $500,000 to $3M. The rates were offered so low at first and under the floating interest rate for the rest of the term.

But not everybody interested fall into that category because there was only so much people who had regular income to qualify for the SIVA Loan Program. So came another loan package, the No Income - Verified Assets Loan Program or (NIVA), where the borrower did not need state their income but just show off their verifiable assets such as some money in their bank deposits. Home mortgage under the NIVA program carries a slightly higher interest rate but was still very affordable.

As if this was not enough, they came out with another loans product, the No Income - No Assets Loan Product or (NINA), where one who has no regular

income or no asset or money in their bank account can still avail of a home mortage. All they needed to show off was their favorable credit score. But because of the higher risk, these loans also came with the highest interest rate.

And whenever any of these loans became sour, the lenders offered to restructure their loans or even refinance them. Refinancing was so attractive that it became a normal practice of homebuyers that others who already paid a considerable amount in their mortgage repayment also applied for refinancing to be able to cash in something for their home furnishings or family vacation. It is like getting another loan on top of the original loan. The strong demand coupled with easy mortgage regime drove the market price of the real estate to double or even triple their original values.

HAPPIER DAYS ALWAYS END
Then came disaster. When those under the NINA and NIVA loans program were unable to regularly pay their mortgage, the interest rates went up making it harder for them to repay. And so that banks can cover their losses, they increased the mortgage rates of those under the SIVA loan program which also made their finances unstable that ultimately they were unable to service their mortgage payments.

So foreclosures came, by tens, by the hundreds and by the thousands! And there were no takers because of high mortgage rates. The strong demand for housing came to a halt. Banks ended up owning large volumes of foreclosed, non-performing assets. They tried to unload their foreclosed assets but there were no takers. They tried to bring down their prices by 20%, 30%, 40% but still there were no takers because banks earned bad publicity - beeing seen on primetime TV news driving out children and old folks alike from foreclosed homes and padlocking them when people were at the end of the rope.

HOW TO MAKE MONEY OUT OF THIS SITUATION
After all these litany of events, the question now is how to make money out of this situation? Are there still real opportunities to make money in real estate in the midst of this lingering global financial crisis? These are valid questions. And I have the right answers to offer.

During times of economic crisis, uncertainty prevails. Families with regular income tend to avoid acquiring a house on mortage because they are uncertain that their income level will be sustained throughout the life of the mortgage. but it does not cancel the fact that they will need affordable homes to shelter them in. And you can make money by filling that need.

You can invest in real estate properties and offering them for rent or lease. All you need to produce is the money to cover your home equity for the bank, but the good thing that goes to your advantage is banks now offer their foreclosed assets at very low prices and rates just to liquidate their non-performing assets which is bad for their books and for their banking operations. You can start soliciting for interested parties who want to avail of your houses for rent or lease while you are negotiating with the bank for lower prices, lower interest and better terms, so that when you are going to sign the deal with the bank you already have a short list of interested clients who are ready to pay rental deposits and advance monthly payment so you need not to shell out so much for your equity. You can even choose to increase your equity payment to the bank so that your monthly mortgage payment will reduce to a desired minimum, of which should come from the monthly rentals that you will receive from your tenants. This scheme will give you a regular and positive monthly cashflow that will even afford you to get another batch of foreclosed housing unit and offer them again for rent or lease. The
good thing with scheme is that you are receiving a regular income stream on something that you did not totally own yet. And remember that these houses will increase in value later on when the economy have recovered.

Another golden opportunity in real estate investments is currently you can negotiate with the bank to get a property at a very low price because banks are now the motivated seller and you act like you are a reluctant buyer! Banks will look at you with great interest because you are a solution to their woes. They want to unload their foreclosed assets at rock-bottom prices just to get rid of them considering that the longer they hold on to it the more that it decrease in value if we factor in the regular depreciation of the assets, and the more they lose money. So getting these houses at bargain prices and improving them a bit and re-selling them for a profit to interested clients can be the best thing. Do not overprice, just be content with small margins
so you will become popular in the market and be able to get more clients, and you will also become the bank's favorite because you keep coming back to them to get another property for rehabbing and re-selling.

OPPORTUNITY ALWAYS FAVORS THE PREPARED
You just need to be creative in your marketing and cashflow management and also be skillful in negotiating with the banks and there is no way that you cannot make big money ultimately from this. Now is the best time to acquire real estate properties while the market is still down where you can get them at around 40% - 70% off the original market price. You only have everything to gain. Just imagine how much you are going to make when real estate prices go back to its pre-crisis levels. That is exactly what we experienced here in the Philippines after the dust had settled sometime after the 1997 Asian Financial Crisis.