Everyone reading this is already well aware of the global economic slowdown and has most likely been impacted by the recession in some way. People with money in the stock market are down approximately 40%, so far, and no one knows if the carnage is finished. With many people expected to hold onto their money, the first half of 2009 is generally predicted, by most pundits, to continue to be slow. Real estate prices have declined across America – even in Portland where home values have generally held their value better than most parts of the country. Bond prices are down. Certificates of deposit are down. The federal government just sold treasuries with zero per cent interest and sold out the entire amount!

Is there anywhere good to invest your money? Maybe this is the right moment to begin buying investment real estate. When the stock market goes down, smart investors consider this as a buying opportunity to add to their portfolio. For the past 20 years, in Portland, no such buying opportunity has been available in real estate. The residential market has gone up every year for the past two decades. Investment real estate had become unaffordable to most investors as prices went so high that rent could not come close to the mortgage payment (and other expenses). One year ago, in Portland, it was almost impossible to find a solid house for under 250k Now you can find many homes priced under 225k in the Portland Metro area.

Although home values have decreased, rents have not. With much tighter credit criteria; no more zero down payments, no more interest only mortgages, higher down payment requirements, and less new first time home buyers, the rental market is very strong right now and rents are increasing.

Almost four trillion dollars has been pulled from the stock market. If you are one who has pulled money from the market, you might want to consider this as a prime time to begin your investment real estate portfolio. As one of my mentors told me, “Investment real estate is a great way to become wealthy over time; it is not a get rich quick scheme.” I believe that you should plan on holding investment real estate for ten years or longer. It is quite possible that real estate prices will continue to decline for the next six months but it is impossible to time the market exactly. If you are going to hold this real estate for ten years or more, it is not so important that you buy it at rock bottom prices. It is more important that you actually do purchase a good property while prices are down, even if you don’t purchase at the very bottom.

If you choose to purchase investment real estate, consider operating this as a business. Speak with your accountant and attorney about the advisability of establishing a limited liability company, or another legal entity, to protect your other assets in case you are ever sued. Plus there are many possible tax deductions such as depreciation and expenses for managing the property that can really reduce your normal tax obligations. Not a bad thing while someone else is paying off your mortgage. If you have any questions about purchasing investment real estate, please call the office at 503.238.7617. Most of us own investment real estate and can easily guide through the process.

Lastly, I am coming out of retirement for 2009 and will be available to work with buyers + sellers. My cell phone number is 503.810.5260 and my e-mail address is steve@altpdx.com.