The bubble has burst on the real estate market. Or, at least that is what the media keeps repeatedly telling us. On any given day you can tune into your local news channel, or even the national networks, and hear about the troubles of the real estate market.
And, yes, while many people are in trouble with the recent real estate developments, there is something that the media is neglecting to tell us. The government is repeatedly dropping interest rates, and with the property values declining, now is the perfect time to buy a home.
The old stock market adage is to buy low and sell high. The same remains true in real estate. When property values are at their lowest, it is the perfect time to buy. Property values historically have risen, and any decreases in value happen only for a short time before rebounding. For those that want to buy a home for themselves, it is a great time to take the plunge. In a few years, you are almost guaranteed equity.
For an investor, there are boundless opportunities. There are several areas of real estate which one can profit, but a few areas benefit greatly during real estate down times.
Property values are low as ever, and many homes can be picked up cheaply as bank repo’s or at foreclosure auctions. Banks are inundated with foreclosed properties, and are reselling them at very low prices just to get rid of them. Banks are in the business of money, not property. They want out of these foreclosures that are coming to them at alarming rates. Rental homes can picked up at a great discount, fixed up, and rented out. Remember, all these people that have lost their homes due to the mortgage crises will still need a place to live. These homes can later be resold, once property values have increased, for a handsome profit.
In real estate, this term means different things to different people. Essentially, a “wholesaler” finds properties that are fantastic deals, negotiates and gets them under contract, and then finds an investor to buy the home. A wholesaler never actually buys the property themselves; they find an investor to assign their contract to. Typically, this nets a wholesaler an average of $2,000 to $5,000 per property. The investor, usually a rehabber, that buys these homes is still getting a good deal, and didn’t have to do the legwork and negotiating themselves. With the shear number of foreclosures and bank owned properties out there, there are enough good deals out there. As long as you have a database of rehabbers to purchase from you, this is a great, and often easy, way to make some money.
Investors, who purchase distressed homes to fix up and sell, are known as “rehabbers”. They make a handsome profit on their investment, and contribute to beautifying our cities and towns. In a down market, rehabbers are subject to the same low prices as everyone else. This simply means, that they may be able to purchase at extreme low prices, but they will have to resell at low prices as well. However, there is still ample room to make a profit at rehabbing. With the current real estate crisis, a rehabber has more choices and opportunities out there than ever before. Beginning rehabbers working with limited funds, also have chances to purchase that they may not have had before. In this category, there are plenty of properties available.
So, yes, the bubble has burst in real estate, but instead of letting ourselves drown inside of it, let’s look at the opportunities that it has given us. Perhaps you have $50,000 in the bank to invest, and have always through that that wasn’t enough to buy a home to become a landlord, or to rehab. Now, that $50,000 will buy an awful lot more than it did 5 years ago, opening doors for more people.
Real estate is still the safest long term investment for your money. There are risks involved, sure, but the same holds true for the stock market. And, the stock market is much more volatile than real estate, despite what the news channels tell us. If you want to take your shot at profiting from the burst of the real estate bubble, start doing your homework. Talk with a Realtor. Talk with an accountant. Talk with a real estate attorney. Your bank account may be all the better for it down the road!