There is no catch-all evaluation of current real estate conditions.  That is to say, although we hear a lot these days about the “buyers’ market”, it is impossible to utilize one trend as a means of describing an entire national or international market characterized by complex idiosyncrasies.  Here is a list of factors which must be considered when attempting to gauge the climate of your market.

The first and most obvious of these parameters is pending home sales, which gives a since of just how much business is being done in a given market.  It is not as useful to look at the raw number of sales as it is to look at the changes and trends over the course of the past few years.  For example, although it’s a difficult time economically in this country, pending home sales nationally have increased by 17% over the course of the last year (indicating a rise in deals done and the start of a healthy comeback of the real estate industry).

In addition to pending sales, you will want to take into account how many of those sales are new vs. existing homes.  This gives a sense of what’s happening in the community—whether or not projects are under way, buildings are being built, communities being developed, etc.  Existing home sales are good, but new home sales mean your community is healthy enough to grow.

Inventory is a very important parameter, as it gives the investigator an idea of how many homes are listed for sale (which can be compared to the number of homes sold in the same time period for a sense of market efficacy).  A lot can be gleaned simply from studying how many and what types of homes are currently on the market.

The next big feature of the housing market to analyze is interest rates.  Although when taken alone, interest rates don’t provide a clear picture of what’s happening in the market, they do give a sense of the affordability of home ownership.  When mortgage rates are as low and attractive as they have become over the last few years, buyers have added incentive to pull homes from the overstocked inventory of the buyers’ market.

Finally, no analysis of the real estate market would be complete without including a consideration of the economy in general.  In the same area as your real estate market query, you’ll want to know the income level and unemployment rates, as well as any foreclosure statistics.  This will give you a good sense of the amount of disposable money available in these communities, and will provide insight into maximizing your opportunities to get a good deal.  Low-income combined with debt makes for a very dangerous cocktail, and although it can be a sign that the economy is suffering, such motivated sellers can provide great opportunities for savvy buyers.

Wherever you are looking to invest in real estate, do not be swept up by too many reports of national real estate trends.  The fact is, although many of the economic problems currently being faced by this country are ubiquitous, real estate success and failure is a local phenomenon.  Just because it’s a slow economy, doesn’t mean it’s not a great time to jump in!  And just because everyone is reporting that it’s a buyers’ market, doesn’t mean any deal you find is a good one!  Be careful and conscientious, and have an understanding of the statistics and trends pertaining specifically to your local real estate market before making any investment decisions.

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http://www.indianainvestmentpropertygroup.com

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Most people assume that when someone fails as a real estate investor, it is because they couldn’t do enough deals to keep their business afloat.  Often, it is exactly the contrary.  Many amateur or unwise investors simply don’t know how to turn deals down.  They end up buying everything they can get their hands on, regardless of its merit as a profit-generating investment, and they wind up drowning in debt and unfulfilled responsibilities.  This, obviously, can be crippling, and is a primary force driving bad investors out of the business.

For those of us left behind—or at the very least those of us clinging for our lives to stay in the game—it is of critical importance that we learn how to pass on the offers that will ultimately hurt our businesses.  Here are some tips to keep in mind.

The first and most important thing to remember is to keep the bottom line in mind.  Although this sounds cold, calculating, and perhaps inhuman, it is the best way to earn a reliable income.  Keeping the bottom line in mind involves the coincidence of two behavioral tendencies: thorough research and emotional detachment.

Thorough research means knowing a property inside and out (quite literally) before buying it.  It means knowing exactly where the value is, exactly what is going to cost money down the line, any hidden expenses, taxes, maintenance, etc.  If it is your first time buying a home (or anything less than your tenth!) you will need the assistance of an expert in figuring out exactly what the property costs—beyond what’s written on the contract.  Once you do your research, you can draw up your own set of numbers which can serve as a tool of comparison during the negotiating process with the seller (it will also demonstrate that you know your stuff, and are not to be taken advantage of!).

Emotional detachment is often a function of experience in the field of real estate, but that doesn’t mean it’s not something you can be aware of and aspire towards in the early stages of your career as an investor.  This is the notion that you cannot simply go around buying all of the properties that you like (you might be amazed at how many investors do this—you probably wouldn’t be shocked to hear how few of them are successful though).  It is important to love what you do—that is the only way to be sure you will do a good job.  That being said, after a few forays into home-ownership, it becomes apparent that when you tour a home for sale, you are evaluating nothing more than the home’s location, structural integrity, and price.  That is to say, everything else (all of the cosmetics and amenities), can be applied in whatever manner the buyer sees fit.  In other words, make sure that if you fall in love with the home, you are not simply falling in love with what the previous owners have done to it (you can decorate any property any way you want).

Keep the bottom line in mind, don’t become overly attached to any properties you tour, and learn to say no by default.  Saying, “No” should become such a habit that when you find the right property to buy, you should have to literally convince and remind and drag yourself to finally say the word “Yes”.  This will prevent deal saturation and overextension of your resources.

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http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.

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The argument made in this article is nothing revelatory; in fact, it has been made countless times before: there is no substitute for real estate, and the industry revolving around it is inevitably destined for success.  It is a simple argument that accurately maintains that we live in a world with a limited amount of space, and although that space may appear to suffice for now in most cases, the fact remains that our global population doubles every few years. Property will become more and more valuable as the demand for it increases to meet the needs of an ever-expanding population.  The reason I’m making this argument now is to help quell the fears of some of the more short-sighted individuals who seem to think that the industry is evaporating before their very eyes.

Yes, the last few years have been tough, and if you could only see data from the last fifty years, it would appear as though jumping into real estate investment was like hitching onto an anchor as it sinks to the bottom of the ocean.  But, in fact, nothing can change the trends stated in the opening paragraph—more people, same amount of land, more demand, more money.  The minor fluctuations from year to year and even decade to decade cannot erase the history of the industry, which as everyone knows can be considered one of the earliest professions developed (land has practically always been used as a form of currency and a mark of wealth, and therefore those who trade and accumulate in it can be said to have acquired their value through real estate).

The only wrench that could potentially keep this wheel from turning along as it always has, would be the socialization of land distribution and trade.  When people fret about the demise of the real estate industry, I can never really understand what they are referring to, unless it’s the notion that somehow the government is going to swoop in, take up all the land, and distribute and oversee it as they see fit.  Of course, if this happens, then there will be no place in this country for someone looking to profit from dealing property.  However, this is a clear violation of some of the fundamental principles on which our socioethical code was written, and we are a long way from anything like that.  Even if that were the case, it would not be the kind of radical overhaul of a transition that would leave you broke and kick you to the curb; rather, we would all have fair warning (and by law, fair say) if any change like that was on the horizon.

So for now, tough it out through this recession, and remind yourself that every time a baby is born, the land around you becomes more valuable (despite what our short-term market indicators may tell you).  Keep the big picture in mind, and keep at it.

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http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

Sellers of homes employ myriad strategies for advertising their properties to buyers.  The trick is to know how to compile all of that information, and where to look to effectively and efficiently find the best deals on the market—and there is no shortage of great deals in a buyer’s market like this.  The first place to look is generally the Multiple Listing Service (MLS), but don’t count out For Sale By Owner lists and other, even more grass roots approaches.

Historically speaking, the MLS has been producing good deals for years.  Essentially, the MLS is an active list of every property listed for sale by a broker—that’s a lot of properties!  With so many houses for sale, obviously the MLS is not a list of great deals.  Like most other things, it exists on a bell curve, where a few deals are terrible, most are just about average, and a very few are great.  Don’t pull up the MLS and expect to instantly see a list of money-makers.  It becomes your responsibility to filter the enormous list down to the properties which meet your business’ specifications, which have highly motivated sellers, or which raise some other flags indicating an opportunity to profit.

The MLS is generally considered the most trusted tool in the business.  It is real estate in the digital information age, a continually updated gold mine of details and photos about hundreds of thousands of properties which can be selectively filtered.  You can see the condition and specification of the homes, and in most cases peruse photos.

But if you want to cut to the chase, and get rid of the MLS brokerage middle man, you can always turn to one of the many For Sale By Owner (FSBO) lists.  This comes with caveats, and the buyer must be forewarned of these issues before proceeding with FSBO lists.  First and foremost, you are now dealing with a market of sellers who were not willing to pay a 6% fee to have someone sell their home.  This could be a good or a bad thing: either they are cheap and it’s going to be hard to get a good deal from them; or they are destitute and highly motivated to sell.  They could be experts and not need any assistance selling, or they could just be testing for offers and not willing to pay a fee (because they are not actually ready to sell).  Whatever the reasoning, always be careful when dealing with someone willing to cut corners to save money.

Just as a smart market investor would not pour all his money into one investment, nor should you put all your resources into following one strategy or the other for finding good deals.  Get creative with the internet, with fliers, posters, etc., making targeted out reaches to specific neighborhoods and property types that meet your business profile’s needs.  Use multiple strategies, get on the phone, put your name on every list, and never close the door on a lead before you’ve had a chance to explore whether or not it could be a money making deal.

Tell us what you think by leaving a comment.  If you would like to be notified when new posts are made to this site, be sure to subscribe to the RSS feed.

http://www.indianainvestmentpropertygroup.com

http://www.practicallyfreehouses.com

Based out of Indiana, Jay Redding is a real estate entrepreneur, consultant and educator with experience in residential and commercial investing.