Here's What We Know About Real Estate Two Years into the COVID Pandemic

 

 
How we live and where we live – this is a big part of the American Dream. The spacious suburbs, a corner of the world to call one's own, a yard to throw around a ball with the kids or maybe pets… these are all part of the American Dream. In other words, people want single family homes in good localities, with good schools nearby, a secure and peaceful life for the family. Now, two years of living with COVID, this is more so than ever before, as I explained to a gathering of Silicon Valley investors recently.

Realty 411.

I have always recommended brand new single family homes as the best option for real estate investors. Brand new is best, because you have a brand new heating and cooling system, a new roof, and things are still within the builder’s guarantee. Owners will have little trouble with renters when everything is new and not likely to break down or need repairs. So in my view brand new homes are always a good idea, and I have nearly four decades of experience and hundreds of my own investments to back me up!
Right now, with our experience of COVID, single family homes have become even more desirable. Families do not want to live in shared spaces with common areas such as in apartment buildings. Independent houses are the best bet; preferably new homes where no one has stayed before seem very attractive indeed. This is something I have explained via magazine articles, TV shows and our live events as well.

My advice for real estate investing – Warren Buffett agrees!

The real game changer in my view is the Fannie Mae loans or the 30-year fixed-rate loans that are unique in the USA. I often have to convince non-Americans that this is real because it simply doesn’t exist in most other countries! These loans are impervious to inflation and the 30-year long term of repayment makes them a gift that no American can afford to pass up if they are serious about creating wealth for themselves.
Think about it… 30 years ago, a postage stamp was 4 cents, today it is 55 cents. In New York City you could watch a movie for $2 then; today it costs you 16 dollars! Thanks to inflation, that loan is going to become easier and easier to repay over the 30 year duration. So Warren Buffet and I agreed on the merit of the 30-year loan, as Entrepreneur Magazine reported recently. Buying as many single family homes as possible is going to help you pay for your kids’ education, buy that fancy car, and basically live out your retirement years not just comfortably, but wealthily!
Another aspect of real estate investing that I now recommend is choosing to invest in the metropolitan areas of the Sun Belt states. Addressing the Realty 411 event, I explain how I started out my investing career and why today, states like Nevada, Arizona, Texas, Oklahoma, Louisiana, Alabama, Georgia, and Florida are a better option than the northern states. Check out the video, and learn more about securing your future and achieving your financial goals. 
I think that we would all agree that if Warren Buffett gives financial advice, it is going to be worth listening to. He has been one of the richest men in the world for many years now, and his unconventional financial wisdom means that he is widely considered to be the most successful investor of the 20th century. So, without doubt, it feels great to have one of my ideas validated by Warren Buffett himself. Watch this to know which one. 

Warren Buffett and the 30-year loan.

In a very recent article by Maurie Backman titled Warren Buffett's 5 Best Pieces of Money Advice, Buffett said that he is a big fan of financing a home with a 30-year mortgage, especially when rates are low. 
“When you take out a long-term loan, you buy yourself flexibility by not locking yourself into the higher payments that come with a shorter-term loan.”
According to him, with interest rates as low as 2% it is a no brainer that people should finance their real estate purchase using this instrument. This low rate spread out over a 30-year period makes it an incredibly attractive option. And guess what? I agree!
I’ve been advising my clients and viewers on the same lines.
I had engaged in some personal correspondence with Warren Buffett sometime in 2012. This was after the recession, and at the time he had written to me that he was interested in buying 70,000 to 100,000 homes for Berkshire. He told me that he wanted to get a 30-year loan to finance each of the homes he bought. In his view, with only a 20% down-payment requirement, it really didn’t get any better! No wonder the 30-year loan recommendation happens to be one of his top five financial tips.

Why I recommend the 30-year loan.

I have myself relied on the 30-year loan to invest in real estate over the years, and it has worked really well for me. I advise my clients to do the same because I believe it is a gift that no American should refuse – and it has worked really well for them as well. Believe me, foreigners can hardly believe that such a long term, fixed rate loan is actually available to Americans!
The reasons why I – and world famous experts like Buffett – recommend this loan are easy to understand. With low interest rates and fixed repayment amounts spread out over 30 years, this loan becomes easier and easier to repay. Inflation and rising cost of living do not impact the amount you pay each month; it remains the same. So at the end of say 10 or 15 years, the amount you're paying each month seems to be little more than a fancy dinner somewhere!
Now there is a catch of course. Warren Buffett wanted to finance thousands of homes with the 30-year loan, but there is a limit to how many loans you can take out. Each individual can take out no more than 10 of these loans. A married couple can get 20 loans between them. So how do you buy more homes as I advise you to do? There is a way. This is also one of the topics we will talk about at our next online Property Expo, and you are most welcome to attend.
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