No doubt, recessions are scary. Just look at these Time Magazine headlines:
“Trying to Fight Back - Inflation, Recession, Oil;” “Corporate Scandals;” “Mid-East Massacres;” “War on Terrorism;" “Sky-High Housing;” “Rescue the U.S. Dollar”
These breaking stories sure sound like they could have been printed last week, but in fact, they were written between 1974 and 1978.
Perhaps these Time Magazine articles are more recent:
“Wall Street Crisis;” “Social Security, What Can the Nation Afford?;' “The New Economy - Where will Jobs Be?;” “The Debt Bomb - Worldwide Peril of Go-Go Lending;” “That Monster Deficit - America’s Economic Black Hole;” “China’s New Face”
While these headlines certainly could be today’s news, they were actually taken from Time Magazine covers between the years of 1982 and 1984. Similar headlines posted in the early 90’s and again in the late 2010’s.
What does this tell us? Based on history, the U.S. seems to face major recessions every decade. And so far, the U.S. has pulled itself out of what seemed to be end-all calamities.
Every time I mention that now is the time to build wealth by investing in cheap properties, I get an onslaught of hate-mail from people who claim I’m crazy. They are astounded that I’d suggest such a thing when real estate is at it’s worst.
I say to them, “Goodness, you have a short memory. In time, all this will pass but the property will still be there.”
It’s easy to blame the wealthy people of this country for “taking” from others. But perhaps, all some of them really did was make a move when everyone else was paralyzed with fear.
Use the pastor of my mom’s church in Chico, California as an example. In the early 80’s when the U.S. was facing another economic crisis, the pastor decided to buy properties in his hometown because they were so cheap. People called him crazy, but he took the risk because he knew he couldn’t support his family on his meager church salary.
Today, he owns 6 properties that he can lease for $1400 per month. It has been almost 30 years, so he nearly has the homes paid off. He never refinanced to take the cash out early.
He bought the homes for $85,000 and they are now worth $225,000, even during the 2007 housing crisis that brought home values down by 50% in many parts of California.
The pastor did not make a large salary when he bought the properties, but he did manage to save enough for the down payments, which were $17,000 each at the time. When he ran out of money, he borrowed from people who were looking for a good return on their money, secured to property.
The pastor doesn’t care whether home values go up or down because he doesn’t plan to sell. He lives off the rents that come in every month. Rents have gone up, so the recession has only helped increase his income.
You can call me crazy if you like because that means I’m in the same category as this pastor. He’s paid off his own home and now enjoys over $6000 per month in passive income from his rentals after all expenses are paid. This money is in addition to his pension, but who wants to rely on a pension these days?
We now have another crisis on hand that gives us another opportunity to buy low-cost, high-yield property. This is not just for the wealthy, but it is for those who desire wealth. Or you can sit and complain that the sky is falling and the world is coming to an end. Which will you choose?
Kathy Fettke is the CEO of www.RealWealthNetwork.com, a resource for new and experienced real estate investors, offering blogs, podcasts, and webinars to keep members updated on the ever-changing real estate market. Membership is free.
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