Real Estate Bubble

[dickmilde]

Real estate investing is different than investing in the stock market... The selection and liquidity are considerably less. I know that there are many real estate deals to select from but you can't sit at your desk and buy and sell them on a moments notice like you can with an an on line trading account using stocks. Also, the real estate market is a very local market and you should only invest in what you know so this also limits the choices. On top of that, there are transaction costs... Flipping property is expensive because of the costs associated with each buy/sell. I have never flipped properties... All my holdings are long term.

If you are interested in a specific area where you know and understand the market and pricing there will be very few properties that you might consider as an actual purchase. In my area for example I have made a connection with a real estate agent that has set me up with an email alert when there is any change in the foreclosure listings in 2 specific zones that I have specified. This is an automatic email that I receive in real time directly from the MLS data base. In my area of interest there are about 35 listings classified as "foreclosure - bank owned" and at this time there are only 2 of them that I would consider for purchase. I am very particular regarding the location and quality/style of neighborhood that I invest in. Absolutely only the highest quality neighborhoods ( not the highest price )... No junk. So this limits my selection considerably. When I make a purchase I am confident that I can hold it for the long term.

So... This process takes time and in my opinion for the person that is interested they need to stay on top of the current activity and trends in their area to be able to take advantage of an attractive property. If you don't stay current with what's going on you will find out later that you missed something that you should have done. This is a good time to be prepared with information.

Florida has been devastated... I had a vacation home in Ft. Myers that I was lucky to sell at the top of the market. There are neighborhoods in the Ft. Myers area where homes that sold for $225-250 K are now going for $50-60 K. Some of these areas have turned into instant slums where the words maintenance and property value do not even exist. I wouldn't take one of these homes if it was at zero cost. They are nothing but a money pit with unbelievable problems associated with the local clientele. A good rule I use is that if I wouldn't live there then I probably don't want to buy it. Keep in mind that the value and quality of the property will have similar value and quality in rental tenants. The high quality tenants don't live in run down junk neighborhoods. All of my rent checks are in my mail box on the first of every month... I don't have to go out asking for rent... I want to keep it that way.