At a recent Forecast 2011 seminar put on by the MetroTex Association of Realtors, a new trend was surfacing as an alternative to traditional investments. And why some of you might find this tough to overcome with your present financial status, empty-nesters are taking advantage of an opportunity that makes a lot of sense.
How many times have you heard, “You wanna make a lot of money? Invest in some real estate!”
Well, that idea still holds true and to some folks, capitalizing in today’s market can help you build your personal wealth as well as your children’s. Here is the low down.
Over the past two years, the ability to obtain a home loan has been difficult for young buyers, as their credit rating must be extremely good to qualify and not to mention the need for a healthy down payment in some cases. In fact, statistics showed that the average credit scores to qualify for loan origination in a normal economy from Fannie, Freddie and FHA were 720, 720 and 650, respectively. Under our current economic situation, those numbers have soared to 762, 758 and 698 in 2010.
The point here is this. With the markets fluctuating at a rate to make even the most stable tummy nauseous, helping your child purchase a home during these times might be the smartest investment opportunity around. Why have your children pay a bank at a higher interest rate when mom and dad can play the banker’s role. Parents can determine an interest rate that is fair, and in turn they can help get their children on the way to financial stability and earn considerably more than they are with their banks.
One drawback is the obvious defaulting on a loan by the child. However, look at this way… it’s a solid investment for you with better returns than the stock market can provide right now. Either way, it can be a win-win investment strategy as long as your child is not Bernie Madoff.
