December 30, 2013

Dean Graziosi - Baby Boomers Are Helping Your Real Estate Investments

I’m Dean Graziosi, and one of my goals is to spread the word about Real Estate investing. Sharing info on Real Estate investing is a passion for me and I truly believe that the world of Real Estate is so big that everyone can find a place that work for them.

The Census estimates 78+ million Baby Boomers. This group will start entering their retirement years now. This group is the richest in real estate held, savings and investment accounts. Their lifestyle decisions going into retirement will influence the economy in a number of ways, and real estate will be right at the top of the list.

The "Golden Handcuffs" Scarcity Theory

A prediction of how markets will be influenced by Boomers assumes that the overall real estate market will continue to improve and be boosted by a scarcity of supply. Boomers are sitting on real estate worth a fortune, but they don't have a lot of cash; the "golden handcuffs" of real estate riches means they can't afford to sell yet.

The golden handcuffs may cause more of these owners to stay put in areas with very high-priced real estate like California, New York, and other areas. There will be fewer homes available, which means higher prices, and happy markets.

What's does this mean for investors in these areas, particularly rental property investors? Few homes for sale and high prices, means increased demand for rental homes. There will be few for sale that’s suitable for cash flow investing. However, the sharp investor will look to the edges. Rents will be high, something we like. The tenants will be forced to move outward from the center and they'll pay higher rents the closer they can locate.

The Dump-and-Move Theory

Another theory is whether the Baby Boomer are downsizing with empty nests, or realizing their retirement dream of moving to a beach or mountains. This could mean a massive sales run when Boomers begin to move.

If this very large group decides to sell for any reason, it's going to throw millions of homes into a market that's only recovering right now because there is a shortage of inventory. This could cause another round of price decreases in many markets. They won't be foreclosures, but investors can take advantage and purchase at below market value prices, converting these homes to rentals. Real estate rental property investors can use this Boomer home dumping to grow their portfolios.

Real Estate is Local - It's a Mixed Bag

One of these market outcomes could be in play already. The good news is that real estate investors are ready for either situation, and there's profit in being prepared. I'm excited and looking forward to the opportunities either or both of these situations will offer; thank you Boomers!

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