Are Real Estate Prices Headed Up or Down??? (Part 2)

Last week we talked about how compelling arguments can be made for either real estate prices headed up … or taking a nose-dive. And the feedback we got seemed to be split right down the middle as well.

So what’s the right answer?

Who the heck knows!

My best educated guess? Prices are headed up this year.

In addition to all the factors I mentioned last week, there’s one other factor that will help keep pushing values north: Foreclosure refugees are back in the market in full force.

Here’s what I mean: The biggest foreclosure years in California’s history were in 2008 and 2009, and anyone who was foreclosed on had to wait 2-3 years before they could finance another home traditionally, utilizing an FHA loan.

Well here we are, 2-3 years later, and that huge block of homeowners who were foreclosed on in ’08 and ’09 are ready to buy again … in massive numbers.

So what does all this mean to the savvy real estate investor? And is there an optimum investing strategy right now?

Couple of points …

  • As long as you can cash flow, it’s probably not a bad idea to buy as much rental property as possible.
  • Remember how back in ’04 and ’05, many speculators were buying new homes in subdivisions in phase 1, then reselling for a profit in phases 2, 3, or 4? I’m not saying this method will work right now with new homes, but this ‘Buy & Sell’ strategy, where you don’t even have to touch/fix-up a property, can work in this market as long as you analyze the deal properly.
  • Utilizing Seller Financing and Lease Option buying methods are the 2 most powerful methods for taking control of properties and creating instant cash flow. In my opinion, they’re the ultimate strategies for creating cash-flow with little money and risk, while also building long-term equity.

What’s amazing is that these types of buying opportunities represent 70%+ of all the available “deals” out there, but yet less than 5% of all active investors are focusing in these arenas.

No doubt about it …we’re certainly in a time of huge opportunity. But it’s still seeded with major pitfalls if you don’t have the right outlook and strategies.

So do all you can to get the right game plan and focus to take full advantage of the current real estate environment … and I suggest you only listen to those who have gone through a boom-to-bust property cycle or two.

History has a way of repeating itself, so seeking wisdom (and warnings!) from someone who’s gone through an up and down cycle … is one of the smartest things you can do.