Christian Living
Today the middle class is slowly disappearing, being squeezed out of existence, because of present economic policies. I think if Karl Marx who was the father of modern day Communism were living he would be quite pleased to see how the middle class is being targeted by our political leaders. He sought a centralized banking system. We have it. He sought to destroy the middle class and that too is now happening.
Just ask yourself if you are better off financially today or better off 10 years ago? Most, I would surmise, would say they had more wealth 10 years ago. I thought people were suppose to get wealthier and become better off financially as they got older.
Traditionally this has been true but powerful forces are at work to change that. Remember Obama's presidential campaign slogan: "Change You Can Believe In"? Oh, yes. There is change in the air but it is not a change for the better for most people. The rich get richer and the poor get poorer and the middle class get squeezed.
Jesus said the poor you always have with you but what about the middle class? They will become either poor or rich but most likely they will become poor if they follow the Lord.
This article will focus a bit on the housing market...specifically the rental income market.
Some people have rental properties or have thought about adding extra income to their households by investing in rental properties.
It is not a bad idea in itself.
The question you should be asking yourself is whether you will have good tenants if you build or buy.
In America the answer that keeps coming up more and more often is "no" and the reason is that the middle class is having their incomes greatly diminished and this is creating serious problems for potential renters.
If you want better returns on your money, as an investor,with less problems you might want to look overseas.
The seeming contradiction is that people are as desperate as ever for affordable rental housing. What people want and what they can afford are often two different things. True demand means the ability to pay for something. Without that ability to pay you have what is called "ineffective" demand.
All across the U.S., low middle-class income means home ownership is out of reach for many people. The Federal Reserve, under Alan Greenspan, created the housing bubble which busted in 2006 and millions lost their jobs, businesses and homes because of the orchestrated collapse. As a result, home ownership has continued to decline, dropping to 63.8% in the first quarter of 2015. That's down from 68.5% in the first quarter of 2007.
As a result of the housing collapse, rental households have grown by an average of 770,000 annually over the past decade. That’s much faster than the increase of new rentals. As a result supply is tight. The number of vacant rental properties droppred to 7.1% in the first quarter of 2015, down from 8.3% a year earlier — near the lowest level in two decades.
I believe things are going to get worse. About 59% of the 22 million new households that form between 2010 and 2030 will rent, while just 41% will buy their homes.
Builders are adding apartments rapidly, however, they are focusing on the higher income renters with fewer rentals for the middle class and poor. There is no reason for developers to target the dying middle class in the United States because of the present economic and financial conditions resulting from the Bush and Obama administrations.
It should be clear to most people by now that there is little difference in the two major political parties. The Democrats and Republicans are both apparently bent on squeezing the middle class.
The percentage of renters paying more that a third (33%) of their income on rent, defined as "cost burdened", is at near record highs. So rents for middle-class folks are rising rapidly, and renters in the middle of the market are under severe financial pressure. In 2013, almost half of all U.S. renters fell into that category. The share of cost-burdened renters is growing most rapidly among people who earn from $30,000 to $75,000 a year.
Now, all this may make it sound like a great time to be a landlord and in some cases that’s true. Seems like everybody is getting in on the house flipping game and either selling to a "greater fool" or trying to buy a low cost house and rent it out for a nice additional source of income but what if we experience a financial collapse of such magnitude that renters can no longer afford sky-high rents? What will happen is that true or "effective" demand for rentals will drop. People will want to rent, but they won’t be able to. As the result of a lack of demand rent prices must fall and so will home prices. Many real estate investors will see losses and a much lower return on their investments.
Options Outside the U. S.
According to some investment gurus I know like Doug Casey, who have lived and traveled in dozens of countries, there are good opportunities to acquire investment properties in Uruguay, specifically beachfront areas north of Punta del Este for around $200,000. This is much less than the average cost of a home in the U. S. which is around $341,000 as of Feb 2015 according to government figures.
Long-term annual rental returns on such investments are around 10%. Where else on Earth can you get that kind of yield?
Investing outside the United States is not as difficult as you may think. Try looking abroad and remember foreign real estate owned in your own name isn’t reportable to the IRS.
Carlton Pruitt ministers the gospel to the Los Angeles area.
Formerly a Hollywood actor (SAG member) and junk removal expert he now spends most of his time studying the scriptures, writing articles, hymns and poems and doing street preaching.
See all his videos on https://www.YouTube.com/user/LAStreetPreacher
CONTACT at [email protected]
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