Real Estate Network

Archive for the ‘National Real Estate’ Category

The last five to six years have been incredible for the real estate lending market; incredibly good and incredibly bad. Skip back to 2005, the height of the residential and commercial real estate market. Home sales (both new and existing) were off the scale, and the building of commercial property was vast. Large, national home builders were constructing millions of new single family homes across the country. Tall condominium towers were popping up in major cities all over the US. Thousands of apartment units were being constructed, and new retail shopping centers were being built on every city block. All was great! People were happy. Consumer confidence was high, unemployment was low, and speculative real estate investors were making money “hand-over-foot.” Buying, borrowing, and selling real estate was a “piece of cake” at that time. Then one day, the wheels came off the wagon. Practically over night the real estate market went from terrific to terrible! Those who invested and borrowed weren’t able to sell their holdings and were devastated; the banks had stopped lending and would not extend further credit to investors.

So what was the impetus of this rapid change in the lending market? Well we’ll need to start back at the housing boom of 2004-2007. National home builders and large condominium developers flooded the residential market with millions of new units. Many of these new units were sold to speculation buyers who received bank financing to purchase these homes. Several of the speculation buyers purchased multiple units hoping to score large profits by selling to real home buyers (better known as “flipping”). However, builders poorly gauged the real demand for housing by true home buyers and allowed investor or speculative buyers to dictate, thereby inflating what the demand truly was. In a matter of a few months, banks and builders realized that the penned-up demand for housing wasn’t anywhere close to the level of the building that occurred within the span of a few years; thus the very basic law of supply and demand took precedence and banks realized that the new supply of housing had incredibly out-weighed the actual demand.

The quick spiral downward began in the last quarter of 2006 and hasn’t stopped. Overnight banks cut credit to borrowers, and investors stuck in the middle suffered horribly. To make matters even worse, Wall Street cut off the supply of commercial, CMBS paper (loans to real estate investors), and thus banks we’re left stuck with large loan portfolios and no hope of being paid off by Wall Street. The Commercial Mortgage Backed Securities (CMBS) market was always an outlet for banks and borrowers. Investors would obtain bank financing to build an office building, for example, and within a short period of time, pay the bank back with new loans from Wall Street. As soon as Wall Street stopped the flow of money in 2007, financial matters for banks became unbearable. Big banks had to borrow from the Federal government, and small banks just failed; new loans were nonexistent.

Fast-forward to today, the second quarter of 2011, and things haven’t changed. New home sales remain stagnant, condo towers remain empty, and commercial space is still vacant. Bank’s REO (real estate owned) portfolios remain at record holdings as foreclosures and bankruptcies continue at a rapid pace. 

SO, where does an investor go to borrow money to take advantage of vastly discounted real estate prices? Unless you’re a public company that raises money via the stock market (which none of us are), you must go to nontraditional sources commonly described as “hard money” lending. What is hard money lending? “Hard Money” typically refers to small loans, generally $ 100k to $ 2mm. It usually involves a quick approval process (48 hrs), a 65 to 70% loan against your total purchase, and funds within two to three weeks. Because hard money is usually used to buy distressed real estate, and the loan to value is conservative, personal guarantees are often not required. “Hard Money” lenders are typically private lenders that specialize in the “niche” lending market. They’ll do their own appraisals after their review of your financial proforma for the property you intend on purchasing. 

The key in finding good, hard money sources is to subscribe to a service or find a broker who ”runs in those circles.” In other words, you’re not going to find these sources in your local yellow pages. There are excellent buys out there so take advantage now!

Did you know that real estate licensing in Mexico is not mandatory? That anyone can sell real estate without having to go through training specific to the field?  There just recently became available a program to obtain a Mexico real estate professional degree and license but again, this is not mandatory.  Yes, unfortunately this is all true. So how can you, as a consumer, protect yourself in such an unregulated market?

Even though the field is not yet regulated, there is an association that was established to ensure good business ethics among its members. This association is called A.M.P.I (The Mexican Association of Real Estate Professionals) A.M.P.I. National was founded in 1956  in Mexico City with the intention to raise the technical level of the profession and establish codes of ethical business practice. This group is diligently pursuing the matter of licensing as well as ongoing training requirements for the real estate field.

This group has been striving towards a higher level of professionalism and has been recognized by NAR (National Association of Realtors) in the USA. Because of their high standards of ethics, A.M.P.I. members are now recognized as NAR International Affiliate Members. A.M.P.I. is also a member of ICREA (International Consortium of Real Estate Association) an alliance of leading national real estate organizations in the world’s major marketplaces.

The constant pursuit for professionalism in the real estate field, has led to the development of courses that members can now take and one day such courses will be a requirement to receive the real estate license. For example, this year in the Cancun real estate region, the A.M.P.I. organization will sponsor a six day course for C.I.P.S (Certified International Property Specialist) as part of the ongoing training for members.

As professional Mexico brokers and agents in the market place, we get to see first hand some of the questionable practices of unprofessional independent or “part time” brokers and it is frightening to see the risk unsuspecting consumers are exposed to. Many foreign consumers are unaware that the real estate profession is not regulated. You should always investigate the background of a broker before entrusting them with your business. Beware, some brokers may use the A.M.P.I. logo without being a member of the association. Some may even use the REALTOR logo if they were a licensed broker in the US, but they may not be a member of A.M.P.I. Selling real estate in the U.S. is very different from here in Mexico, so being a REALTOR is not really of great benefit for the consumer.

In hot real estate markets in Mexico, such as Cancun and the Riviera Maya, it is common to find waiters, taxi drivers, etc. moonlighting in real estate to try their luck at making a hefty real estate commission. These part timers may not have bad intentions but their lack of experience could result in a costly mistake for you.

There are still some horror stories from buyers of pre-construction developments throughout Mexico. In many of these situations, the buyer bought directly from the developer. Many consumers think that if they buy direct and avoid a broker, they will get a bigger discount. Unfortunately, that is not the case. There is always a commission paid. If there is no broker, then the commission is paid to the in-house sales staff that works directly for the developer and represent his interests.  Without your broker, there is no one looking out for your interests. It is especially important in the current market to always have a knowledgeable broker, one who can recommend developments that are safe for investment. There are so many new pre-construction Mexico condo projects on the market which creates the possibility that some of them will not complete construction. Your broker will know the factors that are important in determining the risk involved based on the developers track record, marketability of the project, guarantees to the buyer and market conditions that affect sales.

Since the boom of foreign buyers in the last few years, professional brokers have realized that the way to do business is by transparent transactions. Many have realized that we have to adjust the Mexico purchasing process to one that the foreign buyer understands and gives them the greatest protection.

It is unfortunate for both buyers and professional brokers, that many brokers in Mexico still have not adopted transparent business practices. This not only puts the consumer at risk but stories of fraud and deception always come back to haunt the real estate field. Thankfully, A.M.P.I. continues to push forward to find ways to better protect and educate consumers to ensure the safety of their investments.

There are fewer fraudulent sales every year, but they still happen. Buying real estate is one of the biggest investments you will ever make. To make sure you are working with an A.M.P.I. professional go to http://www.ampi.org/  Don’t be afraid to ask for references and do check them.

Article by jekky

recently china industry alliance general assembly held its first recommendation which is a regional extension of the guangdong sign of the country at the same time the number of family interaction using standard working committee referred to as standard committee has announced the establishment of the new standard committee is also to promote good e home igrs avs audio video coding standard uti uim recommended industry standards terrestrial digital br br tv standards based on standard convergence industry said that although there are government funds the major institutions in the standards the enterprise technical support placed in front of china 39 s problem is the and business model for profitable enterprises with the establishment of profit br br the country from the regional extension br according to report action plan guangdong preparation as an initial difficulties began in 2006 when a nose dive the original number of families in guangdong province public service technical support center deputy director of the china industry league secretary general daniel received the quot china electronics news quot interview said quot ranging from software to terminal and the network transport the whole industry chain the whole technology coverage of large previously only by a department to promote the power of weak small business investment alone is difficult to follow up technical support for product development quot br br in this predicament in 2007 the guangdong government 39 s support for the has appeared under the new transfer the year in february ministry of information industry of guangdong province and guangzhou city launched a quot division province city quot joint cooperation established in guangzhou quot guangzhou innovation and application of industry model base quot to promote the field of core technology r amp d and industrial applications br br since then guangdong province science and technology approved the quot and digital tv technology and demonstration quot projects included in the quot national science and technology support programme quot ministry of education key laboratory for the digital home is located in zhongshan university br br daniel chan told reporters guangdong digital home has not only been supported by ministry of science and 60 million yuan of funds and is now included in guangdong province three br br flat panel tv modern information services digital home one of the industry development strategy will spend one billion yuan this year three industrial technology research and development at the same time has also been to china everbright group led by three developers of financial support br br at present the establishment of digital home industry alliance is the number of families in guangdong area extends from the national flag daniel also told reporters that the government has about 260 000 square meters land for building the digital home industry incubator and research base the country has its own technical standards for e patented good home igrs avs audio video coding standard uti uim recommended industry standards terrestrial digital tv standard would also like to set up r amp d center br br and domestic independent standards convergence addition to the establishment of china digital home industry alliance for the digital home industry to promote industrialization the number of family interaction using standard working committee also announced the establishment br br as the standard committee professor xiao nan luo told the sun yat sen director of the quot china electronics news quot reporter first half of 2008 guangdong has approved the digital home quot digital home remote communication protocol quot and quot digital home wireless radio communication protocol quot the two criteria as the provincial standard however the committee marked the end is the convergence of many national standards he said quot the new standard committee now has more than 60 core members of the unit including huawei poly hui br br tcl haier skyworth and other terminal manufacturers rising br digital and other audio codec standard setting bodies and zhongshan university peking university tsinghua university and other research institutions quot at the same time the new standard established by the committee are to promote good e home igrs avs uti uim recommended industry standards terrestrial digital tv standard based on a standard digital home convergence br br daniel chan said quot we will present various digital home standards through the application to the real floor if the family simply connected consumer electronic products you just realize a multi functional remote control for all terminals which realize tv and computer br br mobile br connection

Article by Marco Nix

The S&P/Case-Shiller index of property values in 20 cities fell 3.1% from January 2010, the biggest year-over-year decrease since December 2009, researchers said in a report last week. Somewhat surprisingly, Phoenix, Minneapolis and Chicago were three of the cities with the largest drops.Rising foreclosures are swelling the number of houses on the market, which may put additional pressure on prices in coming months. At the same time, a further decline in home values may keep potential buyers on the sidelines as they foresee better deals, hurting construction and consumer spending as owners’ equity evaporates.”Prices will continue to move downward, probably for the rest of the year,” said David Semmens, an economist at Standard Chartered Bank, who correctly forecasted the drop. “They won’t turn around until you have consumers feel that housing is genuinely cheap and until they feel a lot more secure in their labor market position.”Another report showed that consumer confidence dropped in March as Americans grew more concerned about the economic outlook. The Conference Board’s sentiment index fell to 63.4 last month, from 72 in February, the research group said.Home prices fell 0.2% in January from the previous month after adjusting for seasonal variations, following a 0.4% December decrease. Unadjusted prices dropped 1% from December as 19 of 20 cities showed declines.The Case-Shiller index is based on a three-month average, which means that the January data were influenced by transactions in December and November. Year-over-year comparisons are considered more indicative.Eighteen of the 20 cities in the index showed a year-over-year decline, led by a 9.1% drop in Phoenix. In January, prices in 11 markets dropped to fresh lows from their peaks in 2006 and 2007, the same as in December.”The housing market recession is not yet over,” David Blitzer, chairman of the index committee at Standard & Poor’s, said in a statement. “At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing.”Washington showed the biggest year-over-year increase, with prices rising 3.6% in January.Unemployment, at 8.9%, indicates that the number of distressed properties may increase, leading to more price declines as homeowners struggle to make mortgage payments. About 8.2% of loans outstanding were delinquent in the fourth quarter, according to data from the Mortgage Bankers Association.Foreclosure filings may climb about 20% this year, reaching a peak for the housing crisis, according to RealtyTrac Inc. The data seller said that foreclosures dropped in February to a three-year low as lenders under legal scrutiny struggled to process a backlog of defaults and put new systems in place for home seizures.A filing influx could add to the surplus of unsold properties and lead to more declines in home values. Other measures released last week showed home prices fell to the lowest levels since the previous expansion’s early stages.The median price of existing homes, which make up more than 95% of the market, slid 5.2% from a year earlier, erasing all gains made after February 2002, the National Association of Realtors said. New-home prices dropped to the lowest level since December 2003, a Commerce Department report showed.Bank of America Corp. chief executive Brian T. Moynihan said that the housing slump is the biggest challenge limiting the U.S. economic recovery.”The problem of delinquent mortgages and falling home values is the most stubborn, entrenched and damaging economic problem our country faces today,” he said March 23 in Detroit at a meeting of the city’s Economic Club.Faced with declining home prices and the growing glut of unsold homes, residential real estate developers are reluctant to boost construction. Housing starts in the U.S. dropped more than forecast in February to the slowest pace since April 2009, and building permits slumped to a record low, the Commerce Department reported March 16.”Builders just can’t make a profit by competing in this market where prices are dropping,” said Patrick Newport, an economist at IHS Global Insight. “The pickup in housing starts that we were expecting to happen this year may be delayed by quite a while, maybe a year or so.”

Appreciation and increased equity are two terms that you will frequently come across while searching for real estate information. Regardless of whether it is information on real estate in USA or local or national real estate these two terms are bound to crop up more than once. Many people tend to confuse these two terms. Let me explain these two terms in the context of real estate investing.

Equity is the difference between the market value of real estate property and claims held against it. If you have a loan against a property, it is a claim against it. Your home equity is the difference between the market value and the outstanding amount on your loan. As you keep paying the installments your equity keeps on increasing.

While increased equity is the direct result of the payments you make on the mortgage,appreciation is something that happens on its own. You can expect appreciation only if you take the right decisions while buying real estate.

Appreciation is increase in price or value of real estate properties. People normally talk about how the value of their house has appreciated. The fact is that houses do not appreciate, they actually depreciate in value. It is the land on which they are built that appreciates. You may be living in one of the hottest real estate in USA and still your house may not appreciate at all. There is also a strong possibility that the prime land may also not appreciate as fast as land prices in other locations. Land prices in prime real estate may already have reached their optimal price leaving little scope for future appreciation.

It costs the same to build a house on any location and depreciates at the same rate too. Maintaining value of a house requires constant repairs. Even if that is done on regular basis it is difficult to get a price that equals the initial cost plus maintenance cost unless the land price appreciates. There may be a case of price of lumber and other building materials going up but that doesn’t have a great impact on the value of buildings.

Understanding appreciation in real estate helps you broaden your outlook when you look at deals. A dilapidated run-down home in a good location is anytime better than a stately mansion in prime real estate. You get a better return on investment on the first as it costs less and there is ample scope of appreciation. On the other hand, it may be quite some time before you are able to find a suitable buyer for an expensive property you buy without considering the potential for appreciation.

Land price appreciates because of the demand and supply factor. While there is limited supply of land, population increases with every passing day. A home owner may sell his house cheap on consideration that it has not been well maintained. You, as a real estate investor should know better that it is the land it is sitting upon is what is more important.

Coming in at number one for the most over valued real estate is…..”drum roll please”……. Naples Fla. Eighty four percent of homes in Naples were valued over a fair market price, according to statistics by Richard Dekasser of National City Group in 2006. The local chamber of commerce along with local real estate agents dispute this report (imagine that). Now, four years later Naples real estate sells for a thirty percent discount. The average homes in 2006 were selling for $ 380,000 and are now valued around $ 150,000 are the statistics gathered in 2010 from National City Group.  Real estate in 213 cities was considered over valued in 2006, now just 87 cities are considered over valued. What a difference four years can make.

Today Atlantic City Nj is the most over priced city in the US at 30.2 percent over fair market value. A close second place, coming in at 28.9 percent is Wenatchee Wa. The third most over priced city is Ocean City Nj. Las Vegas on the other hand, currently has the most under priced real estate in the country at 41.4 percent under market value. Looking for a good place to invest in real estate? Las Vegas might be the place for you to get the best ROI (Return On Investment) with the most under priced houses in the country. Don’t like Vegas? That’s ok neither do I, how about Vero Beach Fla? Vero Beach has the second most under priced homes in America at 39.8 percent. Third is Merced Ca at 37.7 percent followed by Cape Coral Fla at 36.8 percent.

All of these statistics were determined by local interest rates, comparing median home prices, population income and densities over time. Location. location, location, is also an important factor when determining value. For example, a house in downtown Detroit doesn’t have the same appeal as say a house in San Diego Ca. San Diego has great year round weather and beaches and Detroit has bitter cold winters and no beaches. Research shows that when you get a housing bubble burst, you just don’t go back to normalcy, you go beyond to undervaluation. Some reasons for this are due to builders making huge profits in  area run ups. They start making these profits and the builders over build resulting in an excess of inventory that brings down the price of real estate (supply and demand). Also, psychologically, people lose confidence in the market and stop buying homes when they see or experience the drastic drop in the  value of real estate. Four years ago, mortgage companies  were writing mortgages to anyone and everyone who wanted a home whether they could afford it or not. Now lenders aren’t approving these mortgages and are much more restrictive than before due to the colapse in the economy. All of these factors contribute to less people buying realestate, thus driving the price of homes down.

Here’s a list illustrating the most over valued homes in 2006 and 2010.

Metro areaMedian home pricePercent overvalued 2010Percent overvalued 2006Atlantic City, N.J. $ 232,100 30.2%59%Wenatchee, Wash. $ 240,900 28.9%13%Ocean City, N.J. $ 294,800 26.6%47%Longview, Wash. $ 184,700 22.3%24%Honolulu, Hawaii $ 605,300 21.9%31%Asheville, N.C. $ 172,900 21.8%24%Portland, Ore. $ 267,600 20.8%35%Bellingham, Wash. $ 280,200 20.0%43%Corvallis, Ore. $ 266,400 18.9%14%Salem, Ore. $ 201,000 18.2%25%Source: PNC Financial Services and IHS Global InsightMetro areaMedian home pricePercent undervalued 2010Percent undervalued 2006Las Vegas, Nev. $ 129,700 -41.4%38%Vero Beach, Fla. $ 123,300 -39.8%54%Merced, Calif. $ 102,300 -37.7%77%Cape Coral, Fla. $ 118,700 -36.8%52%Houma, La. $ 116,200 -34.6%-1%Port St. Lucie, Fla. $ 115,600 -33.3%72%Warren, Mich. $ 117,500 -32.3%15%Vallejo, Calif. $ 196,900 -31.9%53%Modesto, Calif. $ 138,700 -31.8%67%Stockton, Calif. $ 145,100 -31.8%72%Source: PNC Financial Services and IHS Global Insight

Here is a list illustrating the most undervalued homes in 2006 and 2010.

Metro area Median home price Percent overvalued 2010 Percent overvalued 2006 Atlantic City, N.J. $ 232,100 30.2% 59% Wenatchee, Wash. $ 240,900 28.9% 13% Ocean City, N.J. $ 294,800 26.6% 47% Longview, Wash. $ 184,700 22.3% 24% Honolulu, Hawaii $ 605,300 21.9% 31% Asheville, N.C. $ 172,900 21.8% 24% Portland, Ore. $ 267,600 20.8% 35% Bellingham, Wash. $ 280,200 20.0% 43% Corvallis, Ore. $ 266,400 18.9% 14% Salem, Ore. $ 201,000 18.2% 25% Source: PNC Financial Services and IHS Global Insight Metro area ▼ Median home price Percent undervalued 2010 Percent undervalued 2006 Cape Coral, Fla. $ 118,700 -36.8% 52% Houma, La. $ 116,200 -34.6% -1% Las Vegas, Nev. $ 129,700 -41.4% 38% Merced, Calif. $ 102,300 -37.7% 77% Modesto, Calif. $ 138,700 -31.8% 67% Port St. Lucie, Fla. $ 115,600 -33.3% 72% Stockton, Calif. $ 145,100 -31.8% 72% Vallejo, Calif. $ 196,900 -31.9% 53% Vero Beach, Fla. $ 123,300 -39.8% 54% Warren, Mich. $ 117,500 -32.3% 15% Source: PNC Financial Services and IHS Global Insight

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Once you have decided that you are ready to buy or sell real estate, the next step is to find the right real estate agent. Do not take this step lightly, it is very important.  Carefully consider your situation and what your goal is, this can include a quick sale, maximum profit, finding the biggest discount or generating monthly cash flow.   Remember that real estate agents vary just as greatly as your needs and there are a lot of things to think about.

            The real estate agent is your “agent” that is, they are acting on your behalf.  They are guided by their fiduciary duties.  These are the duties of: utmost care, obedience and good faith, accounting, loyalty and confidentiality, and disclosure of material facts.  Some of these may sound confusing but it is similar to the relationships you have with your doctor or lawyer, they are to act in your best interest as long as it is legal as it relates to the real estate transaction.  It is important to note that you do not actually need a real estate agent to represent you in any real estate transaction.  You may choose to do your own homework and footwork to save the commission. However, real estate agents do a lot of work for their clients.  They find properties, find buyers, compare prices, give experienced recommendations regarding price and negotiations, network and they help to make sure that all necessary forms, money and documents are submitted properly.

            A real estate agent can specialize.  The most common type of real estate transaction is buying or selling a single-family residence.  If you are looking into something else make sure to find a specialized agent.  An agent may have experience in REO’s, investment properties, foreclosures or luxury homes.  An agent’s area can also be their specialty.  It is usually a good idea to work with an agent who is familiar with the local community, its economy and recent trends.  Please note that a real estate agent should not be confused with a Realtor who is an agent who is a member of the National Association of Realtors. 

            Are you feeling a little overwhelmed?  It’s understandable, take a deep breath.  Start by asking your friends and family.  Instead of asking them “Do you know any real estate agents?”  Try asking more probing questions like,” Have you ever worked with a really great real estate agent?”    Don’t forget that the real estate agent relationship is an interpersonal one; you will be spending a lot of time with them.  When seeking the perfect agent for you, ask about their personality.  Some people like an agent who is thorough and punctual; others prefer an agent with a personal touch who spends lots of time getting to know them.  You may want to browse the internet to find an agent; this may give you a lot of ideas about what kind of agents there are out there, but not enough to know if they are the agent for you. Make sure to ask a lot of questions before signing an agent agreement with them. 

            From the moment you decide on an agent, the key to success is communication.  Let them know exactly what you expect and find out their expectations as well.  Especially if it is your first time buying.  If you do not see eye to eye be prepared to walk away.  Staying and regretting it can be an expensive mistake to make.

            Whether you’re buying your dream home or purchasing a rental property, a great real estate agent can be a valuable asset to have on your side.  When a real estate agent is able to find you what you are looking for, they are well-worth the commission they charge. 

Have you ever noticed how buyers flock to purchase property in droves when real estate prices are at their peak, yet buyers are relatively scarce when prices are most affordable? Notwithstanding the fact that this occurrence defies the generally accepted investment strategy to “buy low and sell high”, one can’t help but wonder why attending social gatherings during the real estate boom years of 2005 and 2006 would inevitably lead to engaging in a conversation about someone’s real estate investment and the promise of future profits to be derived from the venture. It’s not all that surprising that many of those recently boasting about their real estate exploits have softened their tone while seasoned investors, dormant for the past six or seven years, have begun to once again start purchasing lucrative investment property. Despite news about the recent real estate and financial industry tribulations that the public is seemingly bombarded with every day, the last few months of 2008 provided a relatively quiet, yet dramatic, surge in real estate sales.

The National Association of REALTORS® (NAR) has reported that residential home sales have increased by an astonishing 115% when the last quarter of 2007 is compared against the same period for 2008. Have the experienced investors purchasing all of this property been ignorant to the steady stream of media reports warning of declines in real estate values? The answer is no, they have simply been waiting for the right time to emerge like a small swarm of locusts to steadily reap houses for sale like crop. In fact, their buying presence has been so prominent that national housing inventories of homes for sale have significantly decreased during 2008’s final quarter, a reliable sign that demand is beginning to once again catch up with supply.

But how do these brave souls know precisely when they are buying at the bottom of the market? Do they throw caution to the wind and simply force themselves to muster the courage to purchase property despite the fact that values may continue to decline in the future? The simple answer is that savvy real estate investors do not purchase property with the expectation of immediate appreciation in value. Rather, investment real estate should be purchased based on the property’s potential for positive cash-flow. Positive cash-flow occurs when a property’s rental income exceeds the owner’s costs to maintain the property. Consequently, when a property provides a positive cash-flow, a decline in real estate prices is of little concern since the owner can simply enjoy the income his property generates until the market revives and the property can be sold for further profit.

During the real estate boom years our nation became blindly infatuated with the appreciation of real estate prices, which represents the amount of value that a property will gain over time. So called house “flippers” brazenly leveraged money to buy numerous properties with the expectation that their values would increase, thus enabling them to sell the properties for handsome profits in a short period of time. These novice real estate quasi-moguls, often addicted to HGTV and other television shows created to promote the industry like Flipping Out and Flip This House, regularly failed to consider property cash-flows prior to making their purchases. Why bother when real estate values will always continue to appreciate, thereby alleviating the need to hold properties for long? After the housing bubble burst, many of these speculators realized that they shouldn’t have built their investment houses out of sticks, and social gatherings became pleasant once again.

Seasoned investors build their investments out of bricks by carefully and conservatively analyzing a property’s cash flow potential prior to purchasing. The primary reason that these investors have been sitting on the sidelines for many years is that most real estate prices have been far too high to generate positive cash-flows and a reasonable return on investment. It hasn’t been until recently that both residential and multi-family housing prices have retreated to levels where rental income will cover monthly mortgage payments and other operating costs. Further, with the construction of new housing and apartments decreasing to a virtual halt, a still rapidly growing local population, and many families displaced from foreclosed properties, an investment property’s owner is free to choose from a tenant base that is now stronger than ever. One can clearly see why a decline in real estate sales prices typically accompanies an increase in monthly rental prices.

No matter what the year 2009 holds in store for real estate investing, it is essential to remember that investing in real estate should always be considered over a long term. Although the opportunity for a “quick flip” may present itself, the distinguishing benefit to sound real estate investments is their ability to provide income no matter what the economy throws your way.