By Peter Vekselman
September 23 2008
If there's any doubt in your mind that Chicken Little is alive and well all you need to do is pick up a newspaper or turn on a newscast. Reporters nationwide are reporting the collapse of real estate prices and most are promoting the idea that real estate is the worst possible investment on the planet right now. Novice real estate investors take note: Reporters are usually behind the curve and if you get your investment advice from reporters you'll get stuck behind the eight ball. Here's the truth about today's real estate market - and why now is the best time to buy.
A fundamental fact about real estate investing is that you're in it to make money. Ideally, you want to make money at three stages of a transaction:
â€¢When you buy
â€¢When you hold
â€¢When you sell
In order to make money you need to buy real estate as inexpensively as you can. The law of supply and demand says that when supply is up, demand falls - and so do prices. That's where we're at right now. You couldn't lose money unless you were trying for quite awhile because prices were on a non-stop trip to the stratosphere. However, a perfect storm was brewing and when the real estate bubble popped it was felt all over the world. Investors and speculators who waited too long to get out of real estate were bombarded by the pieces as prices tumbled back down to Earth.
By investing as heavily as you can in residential real estate when prices are at or near the bottom you stand to turn a massive profit when it heads back up again. The reason is because you'll have a jump start on people who wait too long to get into the game. While they're plotting and planning whether prices are going up, they're losing profits. It's nearly impossible to get in at exactly the right time. The best you can hope for is to be close.
Low prices give you an opportunity to buy more property than you could if it was more expensive. Some real estate investors are afraid to pull the trigger on a purchase because they're afraid it might lose value before it appreciates. If you're smart and you have a good cash flow analysis done before you decide to buy, it won't matter if you lose money in the short term.
If you have positive cash flow, your property will be paying for itself on a month-to-month basis. What that means is that you have more coming in than you have going out. That's a profit. So when your investment property turns around and begins appreciating again, you can ride the wave of appreciation as it builds equity and you become wealthier, while you continue to earn money each month off the income it produces.
Then, when you sell, you get the benefit of the price increase over what you paid for it. This is a true win-win-win situation for you as an investor. The key is having the wisdom to sell at the right time and remembering that real estate is cyclical. Making money is as simple as buying low and selling high.
Buying in a down market is the best possible time to buy. You get to be a three way winner if you follow good real estate investing sense by buying low, enjoying positive cash flow, and turning yet another profit when you sell.
Remember, by the time the news media catches wind of a trend, the trend is over. The news is for reporting what has already happened. They can't see into the future and they're only marginally qualified to report the past.
So buy low, invest well, and secure your future today!
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1000 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US http://www.CoachingByPeter.com . .