Real Estate Investing

How to Cash In On the Real Estate Crash

January 19, 2011

Now I am sure that you have heard of the US real estate crash a few years, I don’t need to tell you any more about that. But all of the signs are there again, and show that there will be another substantial slump in real estate over the coming months. We are already seeing more homes listed for sale than comparable months last year, couple with lower sales prices. So the question is, why is it happening? And while that is a long story, the short version is that increased government intervention along with higher taxes has made a bad real estate market even worse.

But here is the good news…during every major economic down turn, more millionaires are made than in any other economic time.

This method has been proven to be successful over and over again. So what is it? In short, it is basically just taking the opposite approach that the crowd is taking. In order to make money doing what the crowd is doing, you have to beat them to the punch, otherwise you end being left in the cold. It’s kind of like the gold rush, most of the folks that got rich finding gold where there right at the beginning, before it became big news.

Let me give you a better example. With the stock market crash a few years ago, what happened? All the smart investors saw the market tanking, and got out. Then the general public realized that their stocks had taken a major hit, and decided to sell out. The point is, they were too late, and they turned their unrealized losses in to hard losses after the market bottomed out.

So the point is, when a market bottoms out, that is the time to buy, not to sell. In the real estate market, the next few months will be one of the best possible times for you to buy in and make huge amounts of money. The market will come back (a little later on), and when it does, your properties will have appreciated considerably, and you’ll be able to make a hansom profit.

Just remember the number one rule of real estate investing, buying at a discount. Even with a deflated market, don’t pay market price. Get it for less, and you will just be strengthening your position for the next couple of years. I like to acquire properties for no more than about 75% of their market value. Find motivated sellers, and you will be able to arrange this type of discount on a property. Be patient, wait for the deals, look at properties that have been on the market a long time, because the more time a property sits on the market, the more likely the seller will be willing to take a lesser price. If you see a property hit the market that is already under-valued, jump on it immediately.

Trust me, have done my share of real estate deals, even when the market was good, and once I learned this principle, I have always made money. So now’s the time to go shopping to increase your real estate portfolio. Also, consider getting a real estate license, as it can help to drive down the costs of buying your investment properties.

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