Personal Economics 101

Don’t over-leverage the property. Borrowing money to purchase and improve a property is a good strategy. Just don’t overdo it. Two things happen when you over leverage a property. You may not have adequate financial reserves to take care of any unexpected problems that come along. Also, it costs money to borrow money. It will eat into your profit. Today’s low-interest rates are tempting but do the math first. If the interest rate is likely to go up later (balloon payment or adjustable mortgage), run the numbers for the worst-case scenario before committing to the loan. Be conservative in your cost estimates and schedule. It almost always costs more and takes longer than you think it will to make repairs or remodel a house. Especially if you don’t have a lot of experience with real estate or a particular type of deal. Be conservative when estimating costs and schedules and then add another 20% to both. The bright spot here is that when you come in under budget and ahead of schedule, th...

This is a summary of economic reports released during the week ending Oct 30, 2020. These are summarized from the Econoday  web site and other various reports, such as Ned Davis Research.  The stock market overall was down. The DJIA began the week at 28,185 and closed at 26,502 on Friday. This is a daily chart of the SP500. Click to enlarge.   New Home Sales (Oct 26) Actual number: 969,000 (annual basis) New home sales have been soaring, easily beating Econoday's consensus the last five reports. After August's 1.011 million annual rate, Econoday's consensus for September is 1.016 million. New home sales measure the number of newly constructed homes with a committed sale during the month. The level of new home sales indicates housing market trends and, in turn, economic momentum and consumer purchases of furniture and appliances. Durable Goods Orders (Oct 27) Consensus: .4% increase. Actual: 1.9% increase Recovery in durable goods orders is expected to hold stead...

Right now, people are feeling like there is a lot of pressure to buy a home. After all, mortgage rates have been insanely low. So, for many who have been saving up to buy their first home, now feels like a good time. But, while the nationwide real estate market is booming, you probably aren’t looking for an average home just anywhere. And local markets can see vastly different stories playing out that you don’t hear about when you’re taking a look at the real estate market as a whole. So, how can you look at specific data that applies to your specific situation and still make an informed decision? While there are benefits to buying, let's look at some top reasons not to buy a house. First, the original article where this material came from stated that you shouldn't buy if you're nearing retirement. I couldn't disagree more. If the other criteria, such as income, debt, etc., are in line, buying can be a good choice, as it tends to lock in your housing costs. This has be...