Smart investors know that you make money when you buy an asset cheaply, regardless of whether it’s gold, commodities, or real estate; To put it more bluntly, an investor makes the highest profit margins when ‘there is blood on the streets’! Now is such a time in real estate: an avalanche of foreclosures has flooded the US market from New York to California, and every state in between; Few regional markets have escaped the serious economic fallout of the so-called subprime lending crisis. Despite recent herculean financial efforts by the Federal Reserve to minimize damage to the economy and its key financial players, the real estate market continues its dizzying value/price decline.
While this has scared conventional investors away from the real estate market, savvy, otherwise-thinking investors are snapping up residential and commercial real estate assets at 20%, 30%, 50%, and even 70% of current appraised values; even for properties considered ‘upside down’ (mortgage exceeds current appraised value), savvy investors are steering away from deals with juicy returns of 20-40% or more by using the ‘short sale’ method to extract deep discounts from mortgage holders; one such investor in Clearwater, Florida, averages $15,000 to $35,000 per short sale deal, with a volume of more than fifty houses per year bought and sold using the “short sale” method by negotiating with banks. Savvy investors know that markets, including real estate markets, historically behave in a cyclical fashion (“What goes up must come down,” and vice versa). For example, who would have thought that gold, which languished in the sub-$300 per ounce range for years, would rise to the current value of more than $1,000 per ounce? Smart investors who got into gold early on have seen returns of over 300% in less than five years. Smart investors who picked up real estate (including New York City skyscrapers) in the days of the Great Depression in the 1930s, later becoming billionaires and even billionaires! Where the public then saw only despair and a hopeless market, savvy investors saw a golden opportunity to make a ton of money by buying assets as low as 10 cents on the dollar.
Of course, one must invest wisely and carefully choose the right real estate assets to purchase; The true value of a real estate property can only be determined after a careful analysis of several key factors: condition of the property (correctly calculate your rehabilitation costs), its location (accessibility to convenient stores, cultural services, freedom from crime, etc. .), and current appraised value (less than 45 days). The optimal strategy for an investor is consistently the same: buy as low as you can and sell as high as you can; In today’s real estate market, it would be wise for the investor to sell their property inventory for at least 15-20% of market value, to attract bargain-seeking buyers and get to closing as quickly as possible. A wise long-term strategy for an investor would be to sell, rent, or lease with options the inventory of purchased properties to set aside good cash flow for retirement years. The bottom line is, GO OUT AND GET YOUR SHARE OF THE REAL ESTATE TREASURE, and by doing so you’re not only securing your financial future, you’re also helping to heal the US economy!