On Friday – the jobs numbers came out. The country lost over 67,000 jobs. If it walks like a duck, and talks like a duck it’s a duck. These economic numbers are definitely talking like a recession. The jobs are walking out of the US to countries like India and China. US companies are tightening their belt.
What is an Austin real estate investor to do? Dump you dogs.
The Austin real estate market is still a good market. We are moving into our best season– summer buying season. Well located property will still fetch a premium. If you have a property that you don’t want to own long term– sell it now.
I am not saying dump your Austin portfolio. No — Austin real estate market is one of the safest markets in the country. We don’t have the same kind of sub-prime mortgage issues that a lot of other markets face. Only 8.3% of our mortgages were subprime. But a recession could quell the demand for property. Liquidity remains an ongoing concern.
Those in strong cash positions will be positioned to take advantage of deals in the near future. Banks are going to require that investor borrowers have larger cash reserves than they did a year ago. So it’s not only a question of the source and seasoning (where it came from and how long you have had it on deposit) of your down payment – its a question of your financial stability. A credit score of 680 or more won’t be enough — it will take 20% down plus greater cash reserves on hand. It’s going to get tighter and tighter.
This is why you want to dump your dogs. It will take a well positioned, seasoned investor to be able to go through bank underwriting in the future. Those seasoned investors are going to be attracted to prime properties. If you have a dog– dump it now. If you want to be poised to take advantage of reasonably priced prime property opportunities in the near future– you had better get your house in order now.
