OK – now the writing’s officially on the wall
With the latest events in the Euro zone, it’s time to flip the calendar, and look at 2012 in a fresh new light. For real estate investors in the U.S., it’s definitely time to hurry up and act by locking in property purchases before (in the inimitable words of Jim Morrison) “the whole shithouse goes up in flames.” That is to say, before lenders tighten credit to record levels here in the U.S. in response to the coming overseas recession. I for one see the nasty effects of the European sovereign debt crisis hitting our shores by late this year.
Why am I so pessimistic?
Well, in the past several days European investors showed a high level of concern over the safety of their money in European countries. They did so by purchasing six-month bills on German debt that carried a small but negative interest rate. That’s right – overseas investors are now willing to lose a little principal on their investments in the short run just to protect themselves from further economic deterioration, and the potential for far greater losses.
It’s now been shown that Germany, Switzerland and the Netherlands are currently the most stable of all the economies in Europe. And investors are scared enough to lose a little money buying up debt in these three robust economic countries, rather than take their chances on Greece, Italy, Spain and other European Union countries that are so economically fragile right now.
The latest talks…
Further talks are scheduled this week between Germany and the head of the International Monetary Fund, Christine Lagarde, as well as leaders from France and Italy. These talks are designed to bring about more consensus on a plan to keep Euro zone countries from seceding from the Euro’s usage.
Unfortunately, the latest economic data shows further leveling off in European Union countries during 2012, if not a complete fall into recession. In all, it is estimated that European countries will need to raise the equivalent of roughly 2.4 trillion dollars this year just to stay afloat. Needless to say, it’s a daunting task, given the tremendous fears of overseas investors.
The bottom line for property investors
So as much as I would like to hope for and see a positive outcome from the latest talks, as well as an increased economic stability throughout the Euro zone and European Union countries, investors buying debt at negative interest rates are just too big a smoke signal to ignore.
Protect yourself. Buy investment properties now. Don’t be so concerned with obtaining the greatest, absolute rock-bottom price you can get on your investment real estate. Just make sure you invest in positive cash flow income-producing properties while you still have lenders here in the U.S. willing and able to offer mortgages. Believe me, by this time next year, you’ll be sorely missing the leverage you’re able to obtain right now, with mortgage funds that are still available in 2012.
Photos courtesy of nmnewsandviews.com, the666.com, eurocoins.co.uk, senegal-business.com, mediacenter.dw-world.de