Real Estate Investing Rethink

Okay, it's getting tough out there. You've got the gurus traveling around the nation heating up every market they roll into. Home prices are out of control and anyone who can fog a mirror can get a loan to buy a home. It's so out of control that even Donald Trump himself has started a nationwide tour to educate the masses about the virtues of real estate investing as a wealth building tool.

All the hype is causing a tremendous problem for the old timers who know how business should be done. The furor and exuberance is driving prices up, up, up. In days gone by an investor could by an ugly house for fifty cents on the dollar and a pretty house, one needed only cosmetic repairs, for sixty five cents on the dollar. With a little paint here and there and some handyman know-how an investor could make a tidy little profit and move on to the next project or hold the property and make some decent positive cash flow.

The problem today is that prices have risen so high that the profit is gone from the deal. Real estate investors need a rethink. New strategies that give old fashion stability and profitability to their business. So what should investors do? First try seeking higher yields by purchasing new homes and then put it right back on the market. This is an especially good strategy with apartment to condo conversions. Another strategy is use a reverse lease purchase strategy to generate cash flow and profits over a one or two year period. At my firm we teach people the InvestSmart system. (click for details) Or try buying on the fringe in areas where development is approaching but hasn't quite made it yet.

The point is in today's world of rising interest rates and extreme hype about real estate investing, savvy investors have to rethink their traditional strategies. Don't be a lemming to sea and march off the cliff with all the other zombies following the guru crowd. Be like Warren Buffet. Real estate investing has become a commodities business, you need to find a way to make your real estate investment business into a franchise. (For more information on what Warren Buffet says about business change email me at mgross@dividendamerica.com)