“To me boxing is like a ballet, except there is no music, no choreography and the dancers hit each other.” Jack Handy, Deep Thoughts from SNL
Like the eloquent Jack Handy, I have learned to appreciate brutal spectacles like our current economy. It is like a good economy, except many are losing their jobs, people are hoarding their money and no one is happy.
At the same time, we need to be grateful for the actions it forces upon us. Americans are saving their money like we have not seen in years and years as the personal savings rate climbed to 3.2% in Q4 of ‘08, up from 1.3% in Q3 of ‘o8.
Home prices are dropping and making homes more affordable. As a real estate investor, even 12 months ago, it was impossible to buy a rental property and get it to cash flow with 20% down. There is a very generic rule of thumb for investing in real estate called the “1% Rule”.
In simple terms the gross monthly rent of a property should be at least 1% of the purchase price. A friend of mine is buying a duplex at around $300,000 and so the rents should be around $3000 a month, which they now are and wouldn’t have been without this market correction.
I love boxing, more than ballet if you can imagine a guy saying that…and I am learning to love corrections too!
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