Can real estate investing make me money in my area?
This is a great question, and a very common one and I must honestly say, "probably!" I cannot answer 100% "yes" because I don't know if you are afraid of learning or if you're a lazy bum. Both of those make it very difficult to make money doing anything, anywhere. I will say that "I" can make money in your real estate market and if you are willing to put some basic ideas to work, you can too! Here are some essential concepts to get started:
Whether you live in San Francisco or rural Idaho, people still need a place to live. You simply need to make the best investment choices for your location. The key to working with real estate is identifying what will work best in your market conditions at this time. Subdividing rural land when the only interested buyers are farmers would be foolish. Trying to flip a house when nobody is buying doesn’t make sense either. Looking to buy rentals in a small town after the steel mill closes down is not smart. Only with the right method of investing can you enjoy the big payoffs!
Making real estate investing work for you means identifying your area’s market trends. There are a number of ways you can do this. I have personally invested in 4 very different markets in 3 different states (California, Hawaii and Utah). The first thing I do is look online. The Internet has an infinite number of great websites devoted fully to watching the real estate market. You can get started at www.OFHEO.gov. The OFHEO (Office of Federal Housing Enterprise Oversight) is a national entity that promotes all things housing-related. They are especially concerned with Fannie Mae (Federal national Mortgage Associate) and Freddie Mac (Federal Home Loan Mortgage Corporation), which are the nation’s largest housing finance companies. On the OFHEO website, you can look up the house price index, real estate news, market research, housing regulations, public policies, and a number of other great insights to get you started in your real estate education. At this site I look at the trends for housing listed by quarter. Simply go to the site and follow these tabs: House Price Index, Cities, and then find your area in the pull-down menus. You can compare 3 cities side by side. The numbers indicate an increase or decrease in the average price of homes as compared to the same quarter the year before. It is easy to see if your area is in an increasing or flat or declining market trend.
Also online you can search for helpful articles in your local newspapers. You need to know the latest job market buzz and unemployment figures. If the large local furniture manufacturer is shutting down and Wal-Mart is the only other employer, you can guess that tenants will be hard to find and foreclosures will be likely. If a certain school in town keeps getting press for being the best, it is likely to draw families there. It might be wise to invest in a 3-4 bedroom house and not necessarily studio loft space. With enough information and some common sense to connect the dots you can make some great investments.
Talking to other professionals is helpful as well. In many cases, networking is how a beginner can really break into the market. If you don’t like dealing with other people, this isn’t the job for you! When you network, you can get an idea of how other investors and real estate agents are finding success in your state. You don’t have to be a copycat, but hey, if every successful investor in your city is talking about the same thing, than maybe you want to look into it too!
One caution about talking to real estate agents: I love them and hate them. At the core, they are salespeople and they do not get paid unless they make sales. This means that if you ask them if it is a good time to sell your house they will say, “Yes! When can we write up the listing?” If you ask them if it is a good time to buy a home they will say, “Yes, when can we write up an offer?” I had this exact conversation with an agent last year:
Me: “So Jay, I’m thinking about selling my downtown condo.”
Jay: “Well, with uncertainty about future interest rates it is a great time to sell.”
Me: “Well, I’m also thinking about buying something closer to me and easier to manage.”
Jay: “Oh, yeah, with the strong rental market we’re having and projected market appreciation, it’s a great time to buy!”
In this example, I want to point out that Jay was not lying, but he was only mentioning the details that might tip me in the direction that will bring him more commissions. It has been my experience that most agents are like Jay. They will tell you whatever they think you want to hear.
By the way, I did use Jay as the listing agent to sell that condo and he made a nice commission. He was also the listing agent when I originally purchased the condo and he made a nice commission then too. I rented out the condo for 6 months and I made over 60K in less than 8 months total. Do I always use agents in my transactions? No. Please read more about why in chapter four of "Build Your Empire: Lucky Larson's Guide to Real Estate Investing."
To summarize this section then, Yes, you can absolutely invest in real estate in your market. You just have to know what your market is doing. Remember also, you don’t have to quit your day job tomorrow and start doing this full time. Take a few moments to truly look at the market and your own abilities. Start off as a part-time investor. When you make enough money, you can tell your boss at work to “shove it!” Until that day comes, mind your manners at work and dream of a great way to give notice when you have a big chunk of cash in the bank! On my first 6 deals I was still an 8-5 working stiff, but it was sure easy to get a great loan when I had a steady paycheck. Easier loan applications are the only thing I miss. The last day of my 8-5 job was in August of 2004. Now, I'm the boss and I've never looked back.
(*These tips are from one chapter of my real estate investing course, "Build Your Empire: Lucky Larson's Guide to Real Estate Investing." If you would like the whole enchelada then buy the course already! The course deals with everything from finding bargains to financing the deals to renovating to selling for top dollar!) If you are not ready yet to take the big plunge for the course, then at least get whatever free knowlege you can from this site. Visit often, become a member, take advantage of the great Free Information. Then, when you are ready to build your own empire, visit the Products Page.
*
Click HERE to Get your FREE report, "Foreclosure Investing Profits in 90 Days!"
*
