Happy Dance!

On the 15th, Tanna & I sold our first investment property. We bought at the right price, didn't overdue the rehab process and successfully sold the property for a property in a very difficult real estate market. We put $8,000 into the property and made almost $10,000 in profits. Tell me where else anyone can see that kind of return on their money?

It was a peice of cake... Or not.

I will say that I just passed real estate investing 101. However, it was NOT easy. It was one of the most challenging and rewarding tasks that I've ever taken on.

I feel like a giant gorilla just climbed down off of my shoulders...

Some advice for those of you considering real estate investments:

• It won't sell tomorrow. Plan on hanging onto the property for 5 years. That being said, do enough updating so the property can be rented out. Wait until the market starts to take off before 'flipping' the property & putting it on the market.
• How long is your snorkel? Know your worst case scenario. If the property goes vacant or unexpected expenses pop up what is going to happen? Will you find yourself calling relatives and friends to stay out of foreclosure? Don't get in over your head!
• Get past appreciation. You make money buying at the right price and cash flowing. If you are banking on appreciation, you're going to need to hold onto the property for a long, long time.
• Get the right loan product. The right loan will help you meet your goals and maximize the return on your investment. There is no 'one size fits all' loan. Get the right loan for your needs.

I'm not an investment expert (yet). I believe that I am on my way. Wishing you all phenomenal returns on your real estate investments in 2008.

Winners & Losers...

In all markets, there are always winners and losers. It doesn’t matter if you are vested in stocks, commodities, precious metals or real estate.
**Note: If you own a home, you are a real estate investor!
Right now, the real estate industry is taking a beating due to a credit crunch (% of people with access to financing) and huge inventories (foreclosures + new developments).
Losers: Those who have adjustable rate mortgages in declining neighborhoods.
Why? They can’t refinance! This is horrible. I’ve encountered numerous files where the borrower has done everything right. They pay their bills and take care of the property. Unfortunately, their neighbors lack the same commitment and/or resources. Their homes have been foreclosed upon and driven down prices. Ugh…
Losers: Those who wish to sell their home.
Why? Their house may not be worth what they paid for it, they may have lost out on profits that existed a couple of years ago, it will likely take much longer to sell and there are fewer eligible buyers! Ugh…
Winners: Those who are preparing to buy their first home!
Why? Over the long term, homes will appreciate. Treat your home like an investment! Use a competent agent who will provide good comparables!
Winners: Long term real estate investors!
Why? Fewer eligible buyers + thousands with foreclosure damaged credit + huge home inventory = Higher rents and more cash flow potential properties! Once again, you must buy right!
Losers, don’t lose hope (or sleep). Maybe you can rent out your current residence or even do a lease to own! Maybe, you’ll just have to sit tight for a couple of years while the market recovers. There is hope & a light at the end of the tunnel!

Don't Buy New Homes!!!

I'm going to write a book on this. I can't emphasize it enough in today's market!!

DON'T BUY NEW HOMES in NEW DEVELOPMENTS where there is a LARGE INVENTORY!!

You have scrimped and saved.
You've budgeted.
You've hunted.
You've found your dream home!!
It's brand new!
It's in the perfect location!
It's brand new!
It has stainless steel appliances!
It has beautiful brushed nickel fixtures!
It's brand new!

It could be one of the worst investments you make. It is without a doubt, a very risky investment!

Folks, your home is one of your biggest investments! Treat your home as an INVESTMENT!

You don't have to be purchasing a fix and flip, rental or commercial property to be a real estate investor! Your home is the biggest and most important real estate investment 99% of American's will purchase!

The next article will detail some of the reasons to avoid new construction and the risks associated with it. Below, is a link to a horror story I have heard all too many times. The story of a new home, a new homeowner and the upside down blues.

http://www.bankrate.com/nltrack/news/real-estate/20070812_adviser_new_home_price_cuts_a1.asp?ec_id=brmint_ns_mortgage_20070823

Ouch....

I'm not referring to my back after 8 hours of laying tile yesterday... I wish I was.

"Colorado came in second with one foreclosure filing for every 290 households, which was 2.3 times the national average. Colorado's foreclosure activity, at 6,231 foreclosure filings in May, rose 9 percent from the previous month and was an increase of more than 50 percent from May 2006" (Source: CNBC http://www.cnbc.com/id/19193611)

OUCH!

What does this mean for homebuyers, homewners and investors?

• Homeowners - Foreclosures drive market prices down, making it more difficult to sell & move up or to refinance.
• Homebuyers - Lenders have cut back first time buyer programs, but if you can qualify there are a ton of good deals out there.
• Investors - Get off of this foreclosure mindset. Will your investments probably be foreclosures? Yes. 1 of every 290 houses is in foreclosure! Does this automatically mean you're getting a great deal? No way! Look for great deals. Who cares if the property is owned by a bank or private seller?