Hobofinance

Lots of people have gotten rich in Real Estate.   Lots of people have lost money too.  You didn’t hear too much about the losers until the recent foreclosure debacle.  It’s like gambling in Las Vegas.  People only like to tell you when they win.  Somehow the losing part,  they get amnesia (I broke even, I was up but I gave it back). 

 

 

Today’s residential Real Estate market is the part where people lost.  The interesting news is this is a good opportunity for people who actually have money to invest.  The days of the 125% financing, bad credit or the “Liars Loans” (yes A BANKER actually told me that’s what they called “no doc [document]” loans) are over.   At least for now.

 

The good news is there are deals to be had.  You have grasped the concept of using “OPM” (Other People’s Money) and you know there is opportunity but you don’t know how to go about it.  Here are some simple ideas to get going.

 

If you have grasped the concepts of leverage and appreciation then the next questions you need to answer are; Do I have the patience and tolerance for Property Management?  Can I do better with my money somewhere else? 

 

The first question you need to think about very carefully.  If the answer is no, I don’t want to do Property Management, all is not lost.  You need to hire property managers (this will affect your profits but you can still get in the game).  The second question can I do better with my money (maybe) somewhere else depends upon your abilities.  The difference is, if you really do a lot of research on stocks or bonds or commodities, and study and then get “lucky” that you picked the right company or sector you can do fine.  Mutual Funds are good. Even though they tell you the past is no guarantee of the future,  you can see the Fund Manager’s track record.  If he/she was a bozo for the last 10 years and someone else was a winner for the last 10 years, I usually give the ball to the runner who can make the yardage.  Then see what happens.

 

OK. You want to try Real Estate.  How do you know how much a property is worth?  Property for an Investment and Property to live in are two different animals.  Investment Property by definition is supposed to MAKE money.  Next Session I’ll tell you a little about that.

Written by Thomas R Fazio, Owner of Trolley Realty, Denver Colorado