Chris Simms, Certified Mortgage Planner had this to say about today's rates in the market:

Rates right now are holding steady at 6^.  I know its not the news you wanted.  But I might have some good news!

Here's the What, Why and How!

What:  Simply investors are nervous.  They aren't sure what "is" a safe investment any more.  No financial institution seems to be worth a dime.  Insurance is no better either (Case in Point AIG the nation's largest insurer).  Stocks can't make heads or tails, besides who says what they are reporting is accurate anyway?  Not to mention its notlike they have to be accurate because if they fail the government will just pick them back up again.  so its got to be putting it in cash, right?  No not exactly.  Besides putting it under your mattress (which you can't do because if your house burns down its gone and how do you know the insurance company will be able to pay out anyway, won't work. 

You can't put it into a money market fund because you aren't sure if that will be safe either.  Besides will the financial institution holding it be safe?  What about bonds and treasuries?  Well as of last Friday Lehman was still an A rated bond.  On Monday they were worth just about nothing.  So our ratings system doesn't see to work either.  Ok treasuries have to be the way to go.  No not really because the yields on treasuries ran negative yesterday, meaning that the cost of the bond was so high that the interest you would receive wouldn't make up for the additional cost, but its guaranteed.  so what do we have left to invest in?  real Estate.  What, did you say the "R" Word?  Yup!  And here is why.  Real Estate is the only investment that you can still buy (and understand) buy declines have been very minimal compared to the rest of the country.  Most of our declines have come from foreclosures and new construction.  Does that mean your house won't depreciate, no but it does mean that we have mush less risk here in St. Louis.  so lets look at the numbers.

You buy a $100K house in Overland (3bed, 1 bath, 1,000 sq ft).  You put down 20% and get a 30 yr fix rate at 6.75% (a great rate considering).  That brings your total payment (Principal, Interest, Taxes and Insurance) to $693 per month.  Lets just say $700.  You can rent it out for $1,000 per month.  That means you get $300 per month in positive cash flow.  That is $3,600 per year in Cash flow.  That is an 18% return annually on your 20K investment.  The best part is I haven't taken into account the tax benefits of writing off the interest, taxes, insurance, and should you choose depreciation.  Oh and the best part is that if you want to you can sell it in 5 years and expect to at the worst get your money back for it.  But what happens if at the end of five years the value went up 6% or $6K?  With my total investment of $20K, my annual return of $3,600 over 5 years for $18,000 plus not $6,000 in appreciation yielding a total return of 24K for a 20K investment.  That's a 120% return on your money in 5 years.  Wow

Again, this is hypothetical and I have left some additional advantages out.  With anything you can buy a property that is a lemon and loose your . . . . , that's where a great agent and building inspector come in, all of whom the seller will pay for you.

To wrap up, this is a great time to pick up an inexpensive investment with great returns and potential.  Like all things it has to be done right and the property has to be good.

For questions or additional information contact Chris at 314-229-4242 or csimms@pulaskibankstl.com.

The Simms Team has experience working with investors on all types of properties to meet their investment needs.  You may register for a property search 24/7 by logging on to www.StCharlesHomeHunter.com or by e-mailing us at MikeandPat@Trails2OpenSpaces.com.  Our websites search homes in the great St. Louis area including, St. Louis, St. Louis County, St. Charles, Lincoln, Warren, Jefferson counties and more.