Understand investment areas may be evolving as we continue through this cycle:

It should go without saying that the investing landscape is evolving as over leveraged property gets recycled in the system. In addition the external forces of the government are making the market less efficient with prices propped up by free money ($8,000 Tax Credit) and low down payment requirements of FHA (3 1/2%). Through on top of this the tough selling season on the winter and holiday months and you have the recipe for some interesting developments.

Always remember the more challenges in the market mean more opportunities to make money and lose money.

Thoughts for the investor:

As an investor learn the investment areas that we hot during the peek. For example in my area there is a part of town generally referred to as the “Mayfair”. It is or was a very solid investment area full of nice homes, duplexes and other small investment properties. At the peek it was perhaps the most desirable investment area for outside investors. Can you say problem?

As the investors (the government would call speculators) showed up in greater numbers these properties shot up in value. I know of several examples of simple duplexes producing $1,300 a months in rent (total) selling for over $260K. Can you say negative cash flow!!!

I drove this area over the weekend at I can tell you a lot of these overleveraged properties are on there way back to being recycles through the system. But in the mean time while this painful process is happening the area has turned slightly rougher!!!

I suspect we likely have a 24 month window to see this neighborhood reborn as a safe area but it will take some time and some patient investors. Else this neighborhood could keep sliding.

If you researched your investment area you would find similar investment areas ripe with opportunity and challenges. If you chose to invest in these markets understand the cycle with likely get worse before it gets better. So make your money when you buy the property and then manage the units very closely!!!

More Problems = Better Deals = Greater Wealth

Good Investing