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Is Now A Good Time To Buy Real Estate?
Reproduced with the permission of Joel Block below:
There's no single question, that I've been asked more in the last six months, than "is now a good time to by real estate"?
The answer to this question is very simple. It's "yes" and "no".The answer is "yes" if you are a real estate professional. If you’re not a
professional, if you’re not exposed to the market on a regular basis and if
you don't know what's going on precisely in the markets where you operate,
then now is not a great time for you to throw some money around, hoping that
you can cash in on the distress in the marketplace.
At present, the real estate markets are nothing short of a big mess. The
banks are taking over more property then they know what to do with. But
ironically, unlike in the 1980's, the banks are not being forced to
liquidate their inventory by the FDIC, (the agency that regulates banks)
once they take it back. Because there isn't pressure from the FDIC to
liquidate the portfolios of under-performing real estate, the banks would
rather let it sit on their books, than recognize the giant losses that come
with liquidating or writing off the toxic assets on their books. For that
reason, the markets have not fallen to the place where many investors
believe they should be. Real estate investment, and the capital needed to
acquire real estate, has not normalized - and it likely will not normalize
for a few more years.
For that reason, now is a brilliant time to buy real estate, if you are a
real estate professional. If you are expertly aware of the markets,
reviewing the markets everyday and looking at deals, studying transactions,
and histories every day, then now is like being in a candy store. There's
tremendous distress in the market place, and the number of anomalies that
exist are nothing short of amazing. There are huge amounts of opportunity in
certain pockets of the market. You just have to know where to look.
There's no playbook that tells a novice, or someone who does not spend all
day long looking at real estate, where they should go, and what properties
they should buy. Every sector of the marketplace has irregularities, and
seasoned investors are the ones that can spot the irregularities from a mile
away. There are tremendous opportunities for people with the "know how" to
make money. For others, it's a crap shoot.
And as usual, buyers need to beware.
So how does an investor, that's not a full-time professional, take advantage
of these markets?
It's imperative for investors who want to get into the marketplace, to
partner with professionals. Get onto the team of somebody whose an expert at
picking, rehabilitating, repositioning, and disposing of assets in highly
profitable sectors. It's possible to get on the teams of professional
investors, by positioning yourself as a cash investor, and letting someone
who knows more about the real estate game than you do make the buy,
rehabilitation, and sell decisions on your behalf, and then you share the profits with the experts.
Comments (2)
Great post Bryan. It is difficult for the new investor. Many get swept up in the Guru marketing campaigns.
David Wedemire, over 13 years ago
I can't agree more!!! Great time to be a professional and yet very risky for the novice Great Article
Michael Zuber, over 13 years ago