One of the biggest mistakes of the time period leading up to the economic crisis of 2008 was the heard mentality. Basically, if everyone is doing something, then you probably shouldn’t join in. But people don’t want to miss out on a good thing, so as real estate prices kept going up, more and more people wanted to get in on the action and start investing in real estate. Then it turned into a bubble and created a mess.
Now we have the opposite situation. Real estate prices have collapsed, and now people are avoiding real estate like the plague. This is the time to act however, when there’s blood in the streets. Of course you have to know what you’re doing, and you have to be able to analyze value. Home prices have collapsed in many areas. Some will recover, but many won’t. It’s your job to figure out where the drops have been excessive, thus offering real estate that is below market value.
This involves knowing the area. Here’s the thing – you can’t get into the business of real estate without knowing the market. That means educating yourself and doing research. It means understanding demographic trends and which parts of the country will rebound faster and why. For example, you don’t want to consider an investment in properties overseas if you’re not familiar with that area.
If you want to get in the business of investment properties, now might be the perfect time to make the leap. But don’t think we’re going back to the days of flipping houses. Sure, you can make a purchase and renovate it with the idea of selling it, but this market will come back slowly. Only consider places where you can earn income through rentals while you’re waiting for appreciation.
