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Thursday, September 6, 2007

It's a Buyer's Market for Home Investors

If you have been reluctant to buy an investment property but are really interested in doing so, now is the time. Folks who are risk averse tend to shy away from real estate, yet will fund their mutual funds, stocks, 401k plans, etc. with all their spare investment dollars because of a sense of security.

For this very reason, many people were not able to retire after the technology bubble burst around Y2K which hit tech heavy funds hard. A result of the correction that ensued caused many to shift their investment dollars to other areas, such as real estate, which itself is now correcting due to builder surplus and over zealous lending practices.

Everyone knows about the US real estate bubble, or market correction in the US housing sector. It is common knowledge that home foreclosures are through the roof (see
"Mortgages in foreclosure at record high") but the insightful see this as opportunity. If the market is flooded with a particular good, does it not become a buyer's market for that good? Economics 101.

While I believe that it is still possible to buy, renovate, and flip a property for a quick profit (even in this market), I personally feel that building a solid portfolio is wiser for many. After all, the properties I am acquiring now can be flipped for higher profit later when the pendulum swings the other way. The "trick" is buying at the right price so that a profit is made no matter when you sell.

A notable point:
the very first American millionaire, a German immigrant named John Jacob Astor, was a real estate investor (and landlord).

What's holding you back?

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