Almost Free Money
I just returned from an amazing eXp Realty leadership conference in Las Vegas. This was my fourth time visiting the glitzy lights of Vegas. Some of you may never have been, but I am sure that a number of you have visited Vegas ten, twenty, or even more times! Vegas is a place like no other—essentially an amusement park for adults. Interestingly enough though, I saw babies, toddlers, and young teens roaming around the strip into the wee hours of the morning with their parents or guardians.
Vegas is known for the vast majority of the entertainment (and profits for the owner) resulting from gambling. While musical shows, fountains that light up, shopping centers, lavish hotels, and elaborate themes help draw in the guests, casinos would not exist without games of chance. Slot machines, blackjack, roulette, craps, keno, baccarat, and many more provide the billions of dollars in profits raked in by casinos every year.
Vegas is also known for being almost free. A quick search of air and hotel based on double occupancy gets you on the strip for roughly $130.00 US per day per person! Dining can be found for almost free too: breakfast for $5.00, happy hour meals and drinks at half price, and burger joints building hangover cures for $5.00. Vegas is the place to go for an “almost free” vacation if you can stay away from the gambling.
The almost free theme is true for borrowing money as well. Mortgage rates today continue to be at ultra-low numbers, even with the Federal Government stress test in place. Variable rate mortgages are hovering around 3%, taking less than $500 to service $100,000 mortgage.
I recently read an article by best-selling author and world financial analyst, John Mauldin. Mauldin shares that he believes we have a future where global interest rates will remain permanently near zero! He goes on to share how this can be devastating for Boomers and Millennials. The Boomers with retirement nest eggs will be forced to invest in riskier vehicles at the worst possible time for them. The money in the bank will earn virtually no interest income, or even worse, the banks will charge service fees on their deposits. The Millennials on the other hand will feel like it is a hopeless battle to save, creating financial uncertainty for them and the next generations to come.
Hang on! The theme is almost free: almost free money, almost free mortgages. I agree with Mauldin: the G7 countries, and many of the G20 countries, are at record low rates and have been for years. The world financial super powers will be forced into a future where interest rates will remain permanently at near zero. Therefore, if the future of interest rates remains low to maybe zero, mortgage money is almost free. Because of this almost free mortgage money, investment in real estate continues to be the best vehicle to protect your future.
The softening market has taken the casual or non-sophisticated investor out of the market. Today, the market is not teeming with investor/buyers and great deals can be found without it turning into a multiple offer. The well-informed and smart investor is actively searching and looking for a deal that they could not find in months or years past. The key for these investors is that they are consistently searching for the right deal, being patient, and making their numbers work.
The numbers are everything when it comes to investing in properties with almost free mortgage money, and when you are having an almost free vacation in Vegas. Elvis sings the song, “Viva Las Vegas,” meaning, “Long live Las Vegas!” I’ll take advice from the King of Rock and Roll and say, “Viva investment properties,” or, “Long live your investments!”
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