MORTGAGE AND REAL ESTATE QUESTIONS

Uncle Jimmy,

Question 1.
I know you don't like IRA's. Do you think I would be better off to put the money towards additional principle on a 5.75% mortgage?
            
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Answer:
I like private mortgages because they presently have a much better yield than CD's and most other "secure" investments. Your rate of 5.75% exceeds any CD of which I am aware. If you have compared this opportunity to all others - you have my blessing.
            
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Question 2.
I am disillusioned with the stock market. I have been looking into real estate for investment but with such high prices. They give little or negative income. Do you think house prices will go down when interest rates go up?
                  
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Answer:

"Real Estate," in a broad sense, can include anything from single or multiple unit rentals, to vacant land, private purchases, public offerings and anything that comes under the broad umbrella, "Real Estate." Caution is advised. Managing rentals requires skill and an appropriate landlord attitude - not for everyone.

True, many real estate investments create "negative income" but have tax impact that is favorable. Again, proper knowledge is required prior to making any investment.
You will hear me say over and over,  "If you don't understand it; don't do it."

We live in a month to month society. It is my perception that people buy houses based upon the monthly cost more than the purchase price. Therefore, if interest rates go up, a greater amount will be required for interest. That effects pricing. On the other side, if material costs rise, existing homes get a boost. All factors must be studied

Successful investing cannot be reduced to "do this" or "do that." But I advise all investors to LEARN about the risk and reward possibilities of any investment under consideration. I also (you may have noticed) advise extreme caution before making financial decisions based upon the "wisdom" of a salesperson. Salespeople seek commissions. Not illegal, but not to be disregarded.

 
Understand before you invest,

Uncle Jim