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Governmental Meddling: Good and Bad

Just a few years ago, the government was pushing hard for home ownership. They were doing anything they could to get people in homes. That is the American dream right? Everyone deserves a home and everyone should have one.

Well, at least that is what the government thought. So they set out to make it so easy to get a loan that anyone could do it. If you could fog a mirror, you got the loan.

The problem arises when we face reality. Not everyone deserves nor can afford a home of their own. Sorry, hate me but that is the fact.

Many Americans have never learned how to budget and many have never learned how to save. Between age 35 and 55 the average savings is less than $50,000.

Then the government goes out and convinces them that buying a home is the thing to do. They even convince them that a home is an investment and say it is your biggest asset. However, in reality, a home is a liability not an asset.

Remember, assets put money in your pocket each month, liabilities take it. What is your home?

With no idea how to budget properly or how to save money, the average Joe went out and bought a house that was too much for them to afford. They couldn’t afford the maintenance or do it themselves (another skill they were missing.) They couldn’t afford the garbage, gas, electric, water and other basics of living.

Then, when the adjustable rate mortgage went up, they were sunk. You see, the only way the banks could get many people qualified was to get them qualified with a lower interest rate even though it would eventually go up.

You know the rest of the story. America collapsed.

Now the government is at it again. Destroying the marketplace that is.

In knee jerk reactions they changed all the rules and effectively shut down the investment market. They shut down real estate. The foundation and true net worth of the country was crippled with the new rules.

They took the number of homes that an investor could buy down to 4. They put in flipping laws that shut down the investors that were buying all the foreclosures, rehabbing them and selling them to families to live in. They made the situation worse.

Now the good news.

The government is now coming back toward the middle ground.

They have moved the limit of houses from 4 back to 10. Remember you can use blanket loans get past that rule too. We have members and students with 70+ houses. They have suspended the flipping rules and allowed investors to get back out there and start rehabbing America again.

Bank rules are loosening and many loan types that were suspended are now back in place.

Question: Why doesn’t the government stay in the middle and just do what works all the time instead of having to learn the same lesson over and over? Remember the 70’s? Remember the 80’s? Now we have the 2000’s.

I have no answer. I just wanted to let you know that things are looking up and I believe that (even with all my complaining today) that we have one of the best systems of government on the planet. I believe that we will get back to the middle and one day stay there.

Due to all this catastrophe, the opportunity of a lifetime is right in front of you. Low prices, low interest rates and “easier” financing are making this the best time to be investing in real estate in our lifetimes. Go get some.