Taking Stock of the Stock Market
Let’s make today the Monday of the Threes!
1. The Dow was down over 1,000 points earlier this morning.
2. Global markets are rattled.
3. Oil is flirting with record low prices.
Those are three serious downsides. Let’s talk about three great upsides!
1. No matter what the Dow does, people need shelter. Stop right here and read that sentence again. People need shelter. This doesn’t change in good or in bad economic times. Actually, my clients with residential rental real estate prefer bad times because it means more clients for their apartments. How much do they earn? It depends on the building, the rents, and plenty of other factors, but many of them see 10%+ a year. My own cousins won’t consider anything less than 20%+. I’m personally aware of and may list one place that can return 50%+.
And then we get to add in tax benefits like depreciation, write-offs, 1031/Starker Exchanges…
2. Global market movements are meaningless when compared to food. Chew on this: people need to eat. Stop and think about food for a minute. Is the world population growing or shrinking? Is anything going to stop humanity’s physiological need for food?
Here’s another reality: Nobody is making new quality, arable farmland.
Wisconsin makes farmland especially attractive because of our generous property tax exemptions for farmland. You don’t even need to be the farmer! Plenty of farmers are grateful to farm your fields, pay a fair rent, and you get the property tax write-offs. Or, in accordance with tax regulations, perhaps owning your own farmland is the way to justify that new pickup or other things you’ve always wanted that are also legitimately for work purposes!
3. Maybe you’re just crawling out of the hole that was the Great Recession. You got bit, you’re nervous, and today was the last thing you needed. You want a home but the mortgage amount concerns you.
Buy a duplex, triplex, or quadplex. Live in one unit and rent the others. Depending on how you set yourself financially, the amount you pay, and the rents, you could have most to all of your mortgage covered. Want more income? Look for additional garage and parking spaces to rent. Consider installing coin-operated laundry machines for your tenants to use. Add an outdoor soda machine, especially if you’re in a college area. And remember that the desirability of your rentals rises as the economy worsens and others cannot afford to buy their own home!
I am not a CPA. Always be sure to consult your advisors before investing in anything. But if you’ve done so and you want to learn more, please email or call me. I’ll be happy to help make this market a little less scary– maybe even the start of a profitable beginning!