TOM CRONE'S Quick Information on Investment / Income Property Action September, 2005

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Investment Seminar

Bruce Colton, Vice president of Marketing and Analysis for Olde Time Mortgage, and I have scheduled four Income Property Investment seminars. We attached your personal invitation, as well as a convenient electronic RSVP form to the e-mail notices. If you have an interest in attending and these dates do not work into your schedule, please let us know and we will keep you on the invitation list.

If you had any problems opening the attachments, please call me at 612-522-4136.

We truly do have limited space, so please sign up early. The first session is already 25% booked.

Gulf Coast Disaster and the Mortgage Market

Nobody can say for certain. First indicators seem to suggest that mortgage rates might not follow the oil prices. As gas prices rise, mortgage rates fall.

Fixed mortgage rates fell for the third straight week amid increased economic uncertainty stemming from the continued increase in oil and gasoline prices. The average 30-year fixed rate mortgage fell from 5.86% to 5.8%, according to Bankrate.com's weekly survey of large lenders. The 15 year went down from 5.47 to 5.4%.

Because fixed mortgage rates are closely related to yields on long-term bonds, as bond prices rise, bond yields fall. Hurricane Katrina’s destruction has brought oil drilling and refining to a standstill. Consequently, rising energy prices hamper consumer spending, which results in economic insecurity, renewing demand for the safety of Treasury securities. All of this keeps fixed rate mortgages low. Many adjustable rate mortgages are resetting higher, but the fixed rates are much lower than three years ago, when they were at 6.3%. A thirty year loan of $165,000 meant a monthly payment of $1,021.31. That same loan at the current 5.8% costs $968.14 / month.

[overall information from an article by RISMedia, September 2, 2005]

My personal guess is that Fed will not want to add fuel to an already vicious fire. Moreover, the mortgage rate history has been seemingly more protective than not.

Of course, insurance rates will escalate. This is the only direct cost increase having any bearing on income properties. The relative percentage as it fits into the gross expenses of property ownership is what should count here.

All else that flows down from such things as fuel cost increases will be both secondary to the income property area and incidental to life in general.

No Gloom and Doom for Real Estate

It's as good a time as any, maybe better, to invest in real estate. It's coming on winter, and prices are going to stabilize, even go down. There are some income properties out there that have been on the market a long time, and might just accept a fairly low bid. Here are a couple of books that tell it like it is. Read them and get sparked!

Investing in Real Estate, Fourth Edition -- by Andrew James McLean, Gary W. Eldred

Make Money with Small Income Properties -- by Gary W. Eldred, Gary W. Eldred

Have a great September. See you at the seminar. Go Vikings!

Tom Crone
The opinions expressed in this newsletter are solely those of Tom Crone and others being quoted and do not necessarily reflect the opinions of Coldwell Banker Burnet or its affiliates.