Timing the Bottom of the Market
Posted: Feb 07, 2008
In just the past few weeks we have seen continued gyrations in the stock and bond markets. We’ve seen a Federal Reserve that continues to chase the snowball downhill and one that will continue to cut rates in the weeks and months ahead because it waited too long to act. We’ve seen mortgage rates on 30 year fixed rate loans reach 5.25% before spiking back to 5.75% within 24 hours. And we continue to see many real estate investors on the sidelines wondering what to do in this marketplace. “How low will she go?” they ponder.
I am convinced that very few real estate investors, if any, will actually time the market just right and pick “the bottom”, although many are seemingly making a go of it. We have already seen billions upon billions of dollars lost in a market that everyone seemed to think would never stop rising. In the same way that no one saw the top, no one will know when or exactly what will cause the turn from our declining market to a sustained or rising market. One thing is for sure, it will happen; most likely in an unannounced and swift fashion. The markets will form a bottom and rise again. The motivation and flexibility that sellers afford buyers today will be long gone and real estate will regain its good name as being the best long term investment available in the U.S.A.
Real Estate Benefits
The benefits of owning real estate go way beyond appreciation; something many investors have forgotten today. The primary benefits include cash flow, equity build-up and excellent tax benefits. These considerations should not be overlooked when investing for the long term in real estate.
Ponder This
Rental demand is stronger than ever in most residential markets, pushing up rents at approximately 4% per year. Vacancies are shrinking as poor credit is rising and lending guidelines are tightening, making it more difficult for borrowers to obtain financing. When you consider all these “investor” benefits, along with low interest rates (30 yr fixed @ 5.5% today) and an overall price correction in the market, is any real estate “investor” a fool not to be buying as much property as possible today? A question one must “ponder”.
Although many, myself included, have been hurt to varying degrees by the turnaround in real estate values, it does not change the fact that today presents the most incredible buying opportunity for real estate. There are “buys” out there that are simply “incredible”. They are Xtreme as I like to call them; quite Xtreme!
Identifying Value
We continue to find individual buys that are Xtreme. Locally (in MN) we have developed a unique software program that enables us to search and locate property and instantly determine “value”. Value is different than “price” and our program identifies that in seconds.
In the past few months I have been involved in numerous multiple offer situations. Yes, you heard me correctly. I have represented numerous buyers/investors on their purchase(s) in the past few months where we were NOT the only buyer trying to buy that property. Why? Because the property “value” was Xtreme; it was priced well under market.
When property is priced well enough it draws attention – fast attention! The buyer who finds and gets an offer on that property first, often gets the prize! The prize is an Xtreme buy; an Xtreme “value”.
Obtaining the Deals
Structuring such an offer for our clients requires experience, timing and attention to detail. Relationships with other agents may also play a role in this intricate process and oftentimes contribute to the success of getting an offer accepted. Knowledge of dealing with banks and REO properties certainly play a key role. All of these factors are crucial in today’s market and something buyers and investors should seek out in an agent who would represent them.
I invite you to take advantage of this incredibly Xtreme buyer’s market. Very few properties are going to meet our Xtreme criteria. The ones that do will be snatched up quickly by someone. The question is, will it be you?
Many of our buyers/investors are the successful ones who obtain these Xtreme buys through our services. Our key tool is the exclusive software which has been designed to identify the best, most Xtreme “values” once they appear in our local marketplace.
I invite you to learn more about Xtreme Investing by attending one of our upcoming seminars. Details can be found on our www.XtremeInvestor.com web site. We look forward to meeting and working with you as we take advantage of the most Xtreme buying opportunity in decades.
