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One of the popular trends in today’s society is, people are just always thinking of their homes as an investment, and not as a necessity. Although, this is not entirely a bad thing, it somehow affects people’s decisions in getting their own homes.

The thing is, no matter how gloomy the forecasts of the country’s finance is, if you need a house to live in today, you need it today, and the fact that now is just as good as any other time to purchase a property is clouded by fear and paranoia.

As the economy has always been run by the idea of supply and demand, a simple negative word could instantly hit the demands hard, in turn, affecting the rates, mostly forcing them to drop. Yes, you’ve heard it right. Prices and interest rates are at its low right now, with the scare of purchasing real estate due to the recession. This made lots to stall their purchases, lessening the demands, forcing the prices to fall. This is why experts strongly suggest that now is the best time to invest in real estate.

However, if you are still skeptic about the whole economic crisis, you should not fret. As “investing” involves considering the amount of money you are willing to put in an “investment”, starting small can be the best way for you. A number of wise investors have made their way through smaller cities, as these areas’ properties have lower entry costs as compared to those in the metros. Also, these locations are the best places to start honing their bargaining skills to land more discounts on the dropping prices.

And as the whole society has been trying to deal with the effects of the financial crisis, the dive in prices of general services and goods are promising to also affect the drop of interest rates. This event, with the fall of the properties, is a good sign of low real estate prices that you should take advantage of before markets get to pick the situation up.

If you are still a little unconvinced with all of these information, another good way to make you understand the circumstances is by taking a look at the rental trade.

As more and more people are stalling their purchases of properties, more and more are just opting to rent. However, with this rise, the rental trade continuously also raises up their prices. This will be proven by a good number of places, continuously increasing their leasing interest rates. So, just think about it, why would you rent when you can already own a house you want with almost the same amount of money you’ll spend monthly paying the rent?

However, as locations are still an entirely different matter when it comes to real estate, picking the place where you’ll purchase a property may vary from what these data tell you. Areas, especially metros, still hold high prices and interest rates as there is a consistent amount of demand for the area.

So, if you plan on grabbing this opportunity, you should first checkout the market, local and national, and then think about where you’d want to invest. It would also be good to ask some advice from professionals about the matter, so you can secure the benefits of your hard earned cash.

Most children play the popular board game Monopoly and believe that to be successful at real estate, you need to have money. In some cases, this is true. But what if I told you that you donâ??t need a lot of money to successfully invest in real estate? You may think you need credit or collateral. No! You can wholesale property for as little as $10 in some instances. This is not a get rich quick scheme but a real career that can lead you to financial independence. Wholesaling is the best way to make money in real estate. You donâ??t have to worry about your credit score, having a realtorâ??s license or a lot of money in the bank.

The Keys to Wholesaling

Many people think that being a wholesaler is difficult. Not true, if you can develope some basic skills, you can make thousands of dollars per sale. Hereâ??s what makes a successful wholesaler.

1. The ability to find good properties. You wonâ??t find these by scanning the MLS listings in your area or looking through the classifieds (even though you may find a great deal in either on occasion). A simple way to find great properties is to drive around town. Look for properties that donâ??t seem to be in great shape. Better yet, find a property that is being sold by the owner. Networking is another way to find great properties. Let everyone know what you are doing. If you can, join professional organizations. You may find your best properties by word of mouth.2. Hone your people skills. Once you have found that perfect property, you need to convince the owner that he should sell the property to you. (your intentions to find another buyer before it is time to close) You need to have sharp people skills to convince someone who owns a valuable property to sell it to you at a discount. But wholesalers are doing this every day and making returns that are a 1,000 times more than their initial investment.3. Create a great network of buyers. You can find great properties and have great people skills to get the contract, but if you donâ??t have anyone to sell that property to, all of your efforts will fall flat. If you donâ??t know many people in your area, find a small publication in your area that offers free or low costs classified ads. Use free online classifieds such as www.craigslist.org or www.backpage.com. Buyers will begin calling you and you can talk about the properties you have under contract. But donâ??t just consider that first sale. You want to be able to call the buyer back when you find additional properties. Establish a relationship with the buyer. Have several buyers on your speed dial so that when you find that great deal, you can close it quickly. Donâ??t forget the basic principal mentioned above—networking. You never know when your neighbor or your friend in the civic club may decide to invest in real estate. You want them to come to you.

How Much Can I Make?

If you posses the skills listed above, you can triple your current income (or maybe even more) if you are in a basic nine to five job. Letâ??s look at an example:

· You are driving around town and you see a property for sale you think a buyer you know would like.  You find the owner and meet with him or her. He agrees to a sales contract if you put down $100 in earnest money.· The property once valued at $100,000 is in disrepair and is only valued at $65,000. The buyer agrees to purchase the property for $70,000. Once the deal goes through, you have made $5,000. Do you have a day to spare to make $5,000?

As I mentioned earlier, this is not a get rich quick scheme. You have to make contacts, learn how to spot good investment property and have excellent people skills. But once you get these skills down, you will be quitting your nine to five job in no time!

 

Expect Greatness & Nothing Less

Investing in real estate has changed in many markets in our country.  If you are like me, you live in a real estate market that has gone soft.  There are still some areas in the country where homes are appreciating nicely, but nothing like it was just a year or two ago.  There were a lot of self-proclaimed real estate gurus that popped up during the boom times telling you how to make HUGE PROFITS in real estate.  Back then, during the up cycle, investing in real estate was so easy.  You could throw money at almost any piece of real estate and be practically guaranteed to make a profit.  It seemed like anyone who had flipped a couple of houses and made a profit was an “expert” investor. 

Times are different now.  Investing in real estate takes a little more effort.  Investors who haven’t weathered down cycles before are struggling because all they know are massively appreciating markets.  All too many of those self-proclaimed gurus lost their shirts when the markets changed.  Those ads that go “I made $256 Million in real estate in 4 weeks with no money down” are a whole lot less believable.  Okay, $256 Million is an exaggeration, but you know what I mean. 

So the question is, “How do we still go about investing in real estate and make profits?”  Can it be done in these soft markets? 

The answer to that question is quite simple.  I can say without question, without hesitation, the answer is:  YES!  ABSOLUTELY! 

I have been investing in real estate for more than 20 years.  I have seen up cycles and I have seen down cycles.  I have made money and been successful in both.  I can tell you several things about down markets that may surprise you. 

First, experienced real estate investors will tell you that more money is made in down markets than in up markets.  It’s true, MORE MONEY is made in DOWN markets than in up markets! 

Second, experienced investors PREFER to do the bulk of their investing in DOWN markets.  There are a number of reasons for this, but the big ones are that there are more motivated sellers in down markets and the competition (other investors) pursuing these motivated sellers is LOWER.  It’s a double bonus. 

Down markets produce more deals and less competition to get those deals.

One of the investing techniques I specialize in is Lease Options.  Lease Options are one of the absolute best techniques for investing in real estate in down markets.  I’ll say it again, because if you are looking for ways to get involved with real estate investing you need to know this, Lease Options are one of the absolute best techniques for investing in real estate in down markets. 

Let’s take a look at why. 

I’ve already said that down markets produce high numbers of motivated sellers.  Right now in Michigan, it’s very common to see a house listed on the market in two ways, both for sale and for rent.  They are listed this way because the sellers KNOW how bad it is and they want someone, anyone, to cover their mortgage payment.  These double listings SCREAM “Motivated Seller!”  Now, not every single one of these is going to be an excellent Lease Option deal.  But you know what?  That’s okay, there are plenty to choose from! 

The critical part in selecting your Lease Option candidates, in an up market or a down market, is creating WIN-WIN-WIN situations.  The seller must be satisfied with the deal, you must be satisfied and the end buyer must be satisfied.  When investing in real estate, this is what makes us successful.  How does this work?  

To create a WIN for someone we must meet their core need.  A motivated seller’s goal is to sell their house.  Eventually they need their mortgage paid off and the deed transferred out of their name.  If they are willing to rent the house as well as sell it, they are telling you that having their mortgage paid each month is more important right now than actually getting the house sold.  If we can find a tenant buyer for them we are satisfying their core need of paying the mortgage each month and eventually selling the home.  This is a WIN for the seller. 

Our end buyer is looking for a home to own. Their current situation prevents them from getting a mortgage immediately but they plan on being able to get a mortgage soon. They want a home now. They don’t want to wait to get their house.  By allowing them to lease and then purchase the house we are meeting their core need. This gives our buyer a WIN. 

Before we talk about what makes a WIN for us as an investor let’s talk a little more about mortgages for our end buyer. There has been a lot of news lately about sub-prime lending woes and how lenders with riskier loans are facing high rates of foreclosure and may be going bankrupt.  As a result it is getting much harder for people with poor credit to obtain a mortgage.  It is also getting harder for ANYONE to obtain a mortgage with 100% financing (i.e. no money out of the buyer’s pocket). This may sound crazy, but this is actually a good thing for us when investing in real estate. 

When investing in real estate by doing Lease Options it is harder for us to find quality tenant buyers when almost anyone who can fog a mirror can get a mortgage. Not only that but because it was so easy to get 100% financing most buyers save nothing and are unable or unwilling to pay much for an option fee.  With the lending companies tightening their belts I expect we will see a growing population of QUALITY tenant buyers who are able to pay HIGHER option fees. 

The flip side of this is that because lenders are tightening their belts your tenant buyers will need to work harder to restore their credit.  It may take as much as 2 to 3 years for some tenant buyers to be able to qualify for mortgages instead of just 1 year as we had seen before. 

The bottom line is when investing in real estate by using Lease Options the difficulties of the mortgage lenders are just another reason why this down market is a GREAT time for us investors. 

Now let’s look at the last part of our WIN-WIN-WIN equation — the WIN for us, the investor. For us to WIN we need to make a profit. The profit comes both from the equity spread between your option price to the seller and the buyer’s option price to you as well as any monthly cash flow in the rental payments.  With Lease Options it pays to be creative. You’ll find a lot more deals and be a lot more successful investing in real estate if you practice creativity in your structuring. 

The most common motivated seller we encounter is the one who has little to no equity in his home.  Too many real estate investors get calls from sellers that only care about “What’s it worth?” and “What do you owe?”  If the numbers are too close together, they say, “Sorry I can’t help you.”  Click. 

What if you pursue it a little further with a creative mind?  A good question to always ask is “What are your monthly payments?”  If the payments are lower than rental rates you may be able to make some monthly cash flow.  

Another good question to ask is, “How soon do you need to sell the house?”  You may want to ask this question a couple of times while you are talking to them.  You could be surprised to find that the number grows longer each time you ask.  There aren’t too many markets I can think of that stay down forever.  Eventually the house should start appreciating again.  If your option period to the seller is long enough you can capture appreciation to make your profit. 

What about this – “Are you willing to bring money to closing to sell your house?” And if their monthly payment is higher than what you can rent the house for, “Are you willing to pay the difference between the rental amount and your monthly payment?”  These two questions may seem brazen, but ask yourself, what have you got to lose?  If the seller is fully leveraged on the house or their payment is higher than the rental rate you have nothing to lose, because if they aren’t willing to make concessions then you can’t help them!  Certainly some of us feel awkward in asking these questions, but trust me, if you ask this question 30 times, no matter how embarrassed you might feel at the beginning, you will start to feel much more comfortable by the end.

These are just a few creative questions you might come up with to try to find terms that will allow you, as the investor, to make a profit, a WIN for you.  When you add all of three of these together, meeting the seller’s need, meeting the buyer’s need and you making a profit, you have created a WIN-WIN-WIN.  This is what you MUST do to be successful when investing in real estate with Lease Options.

Do you see how much BETTER it can be to find deals in down markets?  Motivated Sellers are EVERYWHERE and there are FEWER investors competing with you.  Combining these two factors allows you to choose your deals with greater care. Always “Cherry Pick” your deals in a soft market.  This is why experienced investors, who have been in both up markets and down markets, prefer the down markets.  Soft markets can provide some of the best deals when investing in real estate.

To find out more about this topic, visit my website at www.WendyPatton.com. My website offers free articles, my national speaking schedule and my new books, Rent-to-Sell, (published late February 2009) and Rent-to-Buy (coming out Summer 2009). You may also be interested in my other books, Making Hard Cash in a Soft Real Estate Market and Investing in Real Estate With Lease Options and “Subject To” Deals. These are books for sellers, buyers, investors and the real estate agents that serve them.

Reprints available with permission only.  Contact: Info@wendypatton.com

Once upon a time, in the seemingly unending real estate booms of the 1980s and 1990s, everybody who could scrape together a down payment and keep the payments up for about three months could flip the house for a profit. Homes in the Sunland-Tujunga area of Los Angeles County, the northwest corner where high-priced Southern California price inflation hadn’t gone hog-wild quite as fast, more than tripled in value between 1997 and 2007 (average $165,000 to an average of nearly $500,000).Those times are gone, probably never to return. Instead of being able to fall over your own feet and make money in real estate, you will actually have to use your brains and your other talents. And now is a great time to start.  Home prices are in a long-term fall, deals are popping up all over, the country is in a recession, and a lot of people just have no clue what to do.  With falling prices comes opportunity for smart investors.  Here are the top 12 reasons why today is the best time in years for investing in real estate:1. You’ll get no scoffers if you make an offer. During boom years, in a seller’s market, it was almost an unwritten rule in some areas that making an offer was just plain bad form. In today’s market the average home is selling for 93-96% of list price according to the U.S. Chamber of Commerce. While this ratio constantly fluctuates, it has been trending down noticeably recently. Sellers know that they are not going to sell their house for full “list” price, however they define that. Attitudes have completely changed in this regard, and making offers under the listing price is back in a strong way for the smart buyer.2. Patience is (almost) a virtue again. Naturally, a booming seller’s market is a hyper-accelerated environment, where everything from house hunting, negotiating, inspections and deal closings were rushed and even frantic at times.  Buyers can take their time now, perusing the listings, surfing the Internet and visiting various homes. The deal, if it gets done, will be at their pace.3. There seem to be quite a few spec homes. A spec home is one that is built without having an identified buyer. A huge number of spec homes were built during the housing boom.  The change in the market left plenty of spec homes unsold, so you can forget about overnight campouts on the sidewalk or entering lotteries to get a shot at a home in a new development. A top housing economist and commentator, R.L. Brown, said recently that U.S. builders have “thousands” of spec homes completed and awaiting buyers.4. You can expect action on repair requests. The psychology of a boom market (remember the Dutch with their tulip mania?) makes people act strangely at times. In a hot seller’s market, sometimes people would buy homes “as is” because they knew that the next person in line would do so. Now when you read your inspection reports, you can actually ask that repairs be made and not worry about someone swooping down and stealing the deal.5. Investment buyers have dried up. As recently as 2005, fully one-third of all homes were sold to investors. Some analyst blame non-occupant buyers for helping to cause the home inflation of 2005-2006, not to mention the sub-prime mortgage debacle and resulting financial carnage. Now, buyers are finding more (and more affordable) homes since the investment buyers have gone off to lick their wounds.6. Due diligence lives again. Buyers in this market, for the most part, are not competing quite so avidly for a home against other buyers, so they have stopped waiving inspections as a way of adding a deal sweetener. There is no reason at all not to have a general home inspection and a termite inspection, or to inquire about any questionable fixtures or other items.7. It is still all about “location, location, location.” During the housing boom you often had to settle on a second, third, or fourth choice area to find an affordable place to buy.  With the change in the market, homes in more desirable first choice areas have come back in range for many buyers.  For instance, in the Phoenix, Arizona area in 2004 and 2005, buyers looking for affordable homes would shop around in Maricopa and Queen Creek, where there were “low-priced” neighborhoods. Today there are even affordable houses across the very desirable Valley region, mere minutes from downtown Phoenix.8. Excellent financing is back. And fixed rates are back, too, as well as first-time buyer programs of various kinds. Once again lenders are offering special programs for public service employees, teachers, nurses and policemen.9. Super selections are everywhere. There are tens of thousands of listings in large metropolitan areas, and plenty in the wide open spaces, too, so you have choices that buyers in a hot market couldn’t dream of. In some areas, there are ten times as many homes on the market as three years ago. In addition, the number of foreclosures, bank sales and seizures means that another source of listings is coming online, and should be ongoing.10. A truce has been declared in the bidding wars. During the hot market years, there could be as many as 20 offers on homes in the desirable neighborhoods of L.A.’s San Fernando Valley. What this suggests is that a lot of people were buying their second picks, or even settle for their third or fourth favorite homes.  Now there is much less competition for homes, so the jackboots and body armor can go back into storage.11. The flippers are taking a breather. Despite the proliferation of TV shows about buying and selling real estate, the flipping sensation has cooled considerably. With the non-resident buyers and investors holding back for now, and the do-it-yourselfers finding something else to do with themselves, serious buyers can take back the real estate market. Play it smart, you will do well.12. The last reason that today is a good day to buy real estate? Let’s make it up close and personal, and tell you why it’s the right time for you, specifically, to buy real estate. Simple: Because you can. That’s right. If you have the money to invest, you always want to do so at what is called a “market bottom,” whatever market it is you’re buying in. Homes are way down, but will rebound one day. If you predict, even roughly, when the bottom has been hit and the prices will start rising, you will know when to buy and when to hold. And that is how you will make money in a down market. It can’t stay down forever, but you may need to work on your patience. The market is one thing that you can gauge, of course, but you can’t hurry!

The real estate investment world is one you should join cautiously. There are so many factors, such as rising interest rates and increased housing inventories, that could make your foray into a “quick buck” a quick loss.

By the end of 2004, there were an estimated 80,000 real estate investors enrolled in investment clubs.

You’ve probably seen the television shows on the networks that show how easy it is to flip a house. That is, you buy it, fix it up and sell it quickly for a profit.

However, with an unpredictable market, you may not be able to flip it quickly after all. The National Association of Realtors recently said that those looking to make a fast dollar in a home they recently purchased may be disappointed.

To invest in real estate, you must have a lot of business in order. You have to know that loss is a real possibility. You can’t be looking for a quick dollar.

You need to start with having your personal home mortgage-free before you consider investing. You will not only have a home that won’t be at risk if your investment fails, but you will learn what it takes to pay off a mortgage. There is a lot to learn in that process.

Then you need to get the correct information. Go back to school, take classes on the side and read everything you can get a hand on about investing in real estate. Don’t turn to the informercials for information. Go to reputable and trusted sources.

Find yourself a mentor that will help you on your path. Look for someone who has been successful in the business for many years. Then start looking for a team of people to help you. You will need a real estate agent, contractor, go-to people, property managers and so on.

Learn the ups and downs of the market and what you should do when they flucuate. You should never go into an investment without having an exit point. Know your limits and know when you need to get out.

Investing in real estate is a long-term investment. There are gains and losses. Choose your path wisely.

Investing in real estate is a highly lucrative venture that has helped scads of people to rake in loads of money. Though the profession may seem delectably easy, it’s certainly not for everyone. Real estate business also fosters several unscrupulous swindlers who make their living by duping newbie investors. Therefore, fresh entrants into the field of real estate must learn how to discern a genuine opportunity from a fake one.
Investing in real estate involves an awful lot of work, especially at the outset. So, it’s only for the serious few who are prepared to face the challenge and the uncertainty of the market. Wannabe investors must have access to the following when they embark into real estate investing:
• Investors must have a significant working capital. It’s true that there are several finance firms that can lend you money for property investment, but you sure won’t wish to be in too much debt to start with.
• You must have a good grasp of the real estate market and the legal procedures pertinent to the trade. In addition, possessing knowledge about the region in which you wish to purchase property is equally crucial.
• Smart asset management and superlative negotiation skills are pivotal for investing in real estate. You would have to convince the homeowner to sell the property.
• Access to a work force that can quickly spruce up a fixer-upper or another property that might have suffered some damage. Be it any trade or discipline, a quick turnaround is a plus.
• A professional property inspector is always helpful when a distressed property needs to be inspected so as to ensure that it’s a viable deal.
As a newbie, you are most likely to follow the old-fashioned technique of buy-and-hold. In such a scenario, you would serve as the landlord for the property. The property would normally experience appreciation over time, and you may sell it after it has risen to a certain preferable value. During the time you hold the property, you may rent it to a tenant, thereby generating another monthly source of positive cash flow.
Having gained experience investing in real estate by following the above technique, you can move over to more lucrative deals, such as fixer-uppers and foreclosures. Finding these can be tough, and hence you would invariably require the services of a professional bird-dog (one who finds lucrative property deals for investors).
On the whole, investing in real estate can lead to ample gains. But it is imperative that you have the above outlined real estate tools in your arsenal.
Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)

If you’ve been thinking about starting to invest in real estate, but haven’t taken any substantial steps toward taking the plunge, you’re not alone. There are many people who would like to get started, but continuously put it off for one reason or another. Most people, however, are intimidated by the thought of getting involved with something that seems so obscure and complex.

Many only purchase one house during their entire lifetime, and even this is being generous, since there are some who never purchase a real estate. It is likely that this line of thinking causes some to procrastinate beginning real estate investing. If you want to make progress towards your goal, you must first put aside everything that is hindering you from making the first step.

The first thing you need to do is figure out what has been keeping you from starting to invest in real estate. Once you know this underlying reason, you can begin taking the necessary steps to become more comfortable with it.

There are some obstacles that are common among new investors. Lack of training and understanding is the most prevalent one. If you feel like you don’t understand the world of real estate investing well enough to make a start, then you can at least take steps to familiarize yourself with the components you do not understand. There are a number of resources available, both online and offline, to provide you with the information you need. You can purchase books, use the internet, or attend a training event to get more information. There are also quite a few online networking boards and forums, which are full of information targeted towards new investors. Not to mention, by utilizing these types of sites, you might meet someone that would be interested in mentoring you.

Another reason that many people are afraid to take the first step is because they feel they do not have the cash necessary to get started. One thing you should understand is that there are many ways you can get started without having substantial amounts of your own money to throw around. In fact, many experienced investors will tell you that you should never put any of your own money into a deal. There are many creative real estate investing techniques you can use so that you never have to come up with the cash yourself. The best thing you can do is properly research these techniques to learn more.

One way of getting started with real estate investing without much risk is to first work as a bird dog. Essentially, a bird dog is someone who informs other real estate investors about investing deals. The investor then pays the bird dog a referral fee once the deal has closed. Being a bird dog gives you experience with locating investing deals. Once you are comfortable with locating deals, you can then begin closing the deals yourself.

Getting started in real estate investing is not as easy as it first may seem. If it was, everyone would be doing it. There are a lot of details that make many new investors weary of even getting involved. If you first figure out the aspects of investing that cause you to be fearful, and then work on settling those issues, it will make the process much easier.

Few people even consider making money in real estate investing because they think it to be extremely difficult. Most people will also rather go through a realtor company or property broker to help them buy their homes but if they knew that it was possible to save thousands of Dollars by having a little knowledge on how real estate works, they would definitely rather do it on their own. If you visit any real estate website, there is always a lot of technical terms and jargon written on it making dealing in property matters look seriously complicated. In reality this is not so, and with a little reading and research you can buy your own home and even become involved in real estate investing that can make you a lot of money in both the short and long term if it pleases you.

The right way to invest in Real estate for maximum returns

It does not really matter whether you already own your own home or are a new home buyer. Certain inside information can help you secure land and homes at a fraction of their value if you know how it is done. This is through the purchase of tax lien properties and foreclosed homes which can be located all over the United States. Knowing where to find these listings and how to go about buying and selling these homes can make real estate investing hugely lucrative. It is possible to own a luxury home you would never have considered possible just by doing a little research, and finding out where y to get insider information. Armed with this knowledge making money with real estate investing will become second nature and you can build wealth and own the home of your dreams quite easily.

Invest in Foreclosed homes and tax Lien Properties.

It is not only professionals’ realtors and property investment brokers that can make money on foreclosed homes and tax lien properties; anyone can do it if they had the right knowledge.  Many realtors already have the inside information and have become extremely wealthy knowing how to secure foreclosed homes and tax lien properties which they purchase and sell, at huge profits to home buyers who are none the wiser. You will find that in the majority of cases realtors live in large luxury homes as well that have been procured from sales of this nature.

Real estate investing for the long term is considered far more sensible than short term property buying and selling because this will allow you to absorb any market fluctuations but either way the value of properties are apt to increase over the longer term.

Real estate investing with knowledge on how to purchase tax lien homes and foreclosed properties allows you to enjoy the best of both worlds. Although location is considered important when looking at real estate investing; buying and selling of tax liens and foreclosure properties can be done anywhere all over the United States and resold for fast returns.

Learn More About Buying Cheap Homes here

Investing in real estate is one of the few ways for the average person to gain wealth. Can you become rich overnight? Not very likely. Real estate investing should be considered a long term strategy that can gain you tremendous amount of wealth over time but you must do your homework first. The majority of people that are getting into the real estate investing market are simply purchasing a home in an area that they are familiar with and then wonder why they are not rich after a couple of years.
Do a search on the internet for real estate investing and you will find hundreds of ways to get rich quick through real estate investing. And it’s true, if you are selling books, DVDs or real estate seminars you can become wealthy in a short period of time. If you are investing in real estate it is just not going to happen without the proper up front research.
There are three main points you must consider before purchasing your first property and they are location, location, location. This is a rather simplistic view of real estate investing but it has never been more true than today. Thousands of people are getting into the real estate market, and yet over 90 percent of the foreclosures in the market today are from non owner occupied homes. This means that people that have purchased a vacation home or purchased a second home for investment purposes have gotten into financial trouble. This Usually happens because they did not purchase that asset in the correct location at the correct time. So the question is, how do you find the correct location to invest?
Any locations can be the correct location to invest in real estate as long as the timing is right. There are four cycles of real estate investing and the cycles can run from 7 to 40 years depending the the intelligence of the local government. These cycles are Buyers Stage 1,
Buyers Stage 2, Sellers Stage 1 and Sellers Stage 2.
Buyers Stage 1 – strategy buy and hold.
1. Oversupply of properties on the market.
2. Prices and rents are falling.
3. You will see a spike in the properties time on the market.
4. Unemployment is at its highest.
5. New construction is overpriced and sales are stagnant.
6. Construction jobs are at an all time low.
7. Foreclosures are at its highest rate.
8. Investment properties are not being purchased or being purchased at a slow rate.
Buyers stage 1 is a declining market and you will need to shop around for a good investment because you do not know how low the market will go. If the local government is not taking action at this point then the market turnaround will be delayed and more care will be needed taken. Always purchase a new property with a lot of equity and a good cash flow to help minimize your risk.
Buyers Stage 2 – strategy buy and hold – also known as the Millionaire Maker.
1. No new construction.
2. Demand for housing is increasing sharply.
3. Properties time on market is decreasing.
4. Rents and Prices for property are at its lowest.
5. Foreclosures are starting to decrease.
6. Job growth is increasing.
7. Rehabbers are purchasing an increasing number of properties.
8. Fewer properties are getting on the market.
9. Demand for properties is increasing because buyers are able to qualify at the low prices.
Buyers stage 2 only happens after the local government is starting to attract new business into the area. For every one new job brought into the area three new jobs are created. These newly created jobs are the butchers, bakers and candlestick makers. In other words the support jobs that are needed to service the new people in the area. I believe that the most important thing to watch for in this market is the job growth rate. New people coming into the area will require housing which will drive up the price. Your local economic adviser counsel is a good place to look.
Sellers Stage 1 – strategy buy and sell quickly.
1. Demand for property is increasing.
2. The time on market for properties in decreasing.
3. Property taxes are on the rise.
4. Unemployment in decreasing.
Sellers stage 1 is a very risky time to be investing in property because you do not know how long before the sellers stage 2 will occur. Be sure you know the signs of the next phase so you can get out of the market at the best time.
Sellers Stage 2 – strategy sell, sell, sell.
1. Supply of properties has sharply increased.
2. Time on market is increasing.
3. Construction of new homes is increasing.
4. New job growth is slowing.
5. New real estate investors are jumping in.
6. First time home buyers are increasing.
One of the ways to watch for new construction of new homes is to check with the local building permits department. You will be able to pick up some good deal from the new first time real estate investors that jump in during the sellers stage 2 market. Always do your home work prior to investing in real estate.