THE RULES:
There are many rules in a fluid real estate market, but here are a few that we believe hold true IN ANY MARKET (one favoring buyers; one favoring sellers; it does not matter):

•LOCATION, LOCATION, LOCATION
•MONEY IS MADE ON THE BUY
•SELLERS SET ASKING PRICES; BUYERS DETERMINE VALUE
•BUYERS BUY VALUE
•CONTINGENCIES CLOUD NEGOTIATIONS (THE MORE “IFS” THE FEWER DOLLARS)
•THE HARDEST THING TO GAIN IS TRUST; THE EASIEST THING TO LOSE IS TRUST
•REPUTATION AND ETHICS ARE VALUE-ENHANCING ATTRIBUTES
•A HOUSE HAS DIFFERENT VALUES FOR DIFFERENT BUYERS: BUYER A CAN BUY HOUSE X FOR LESS THAN BUYER B

Continue reading Colorado Springs Real Estate Market Condition-May 2008

Most of you financially savvy folks out there learned early on that homeownership is an important step in achieving long-term financial security. This, generally speaking, is a truism that is pretty accurate. In the process of keeping a roof over our heads, homeowners, with each mortgage payment, are investing in our financial future. Fiscal discipline is a virtue that is often lacking in our society (just look at how our federal government has behaved for the past eight years) so this kind of automatic equity-building is a good thing.

But before you build that McMansion consider this: like aspirin and fine wine, more of a good thing will not necessarily lead to a superior outcome. Yes you should own your own home, but if you supersize it then you’ll be paying a cost.

Continue reading Is it better to go bigger? There’s a cost to living large…

“The way you make money is not following the herd. Lower prices mean greater investment opportunities because there are more motivated sellers and more deals coming on the horizon. Now is definitely the time to buy … but to buy smart.”

That philosophy, spoken by Robert Shemin — Wall Street Journal best-selling author, nationally renowned speaker and major real estate investor — is at the root of successful foreclosure investing in the market today.

An increase in foreclosures translates to more available investment opportunities. And more available investment opportunities creates competition, driving down real estate sales prices across the board.

Continue reading Savvy Investors Find Great Opportunities

Back in 2006 I hired someone to perform some professional services. He was small businessman running a limited liability company, came with good references and was recommended by some people that I trusted.

We agreed on a $2,000 month-to-month retainer to do some marketing work. I paid him the first month’s two grand, he cashed my check and then disappeared. Vanished.

So here are some things I learned from this experience.

Trust is crucial. I do business based on looking someone in the eye and shaking their hand. You can’t do business without taking risks. Trust is a big factor in my decision making process, and this experience won’t change that fact.  But it does emphasize the importance of having a rock solid contract, and an organized file of every check that you’ve paid for services. A great convenience of today’s internet banking world is the fact that you can easily log on, click on a payment, and print out a front-and-back copy of the endorsed check. This guy took me for a ride, but I archived the paper trail and stayed prepared for round two.  This ain’t over.    You can’t sue someone you can’t find. That was the big hangup in this case. I got all the prep work done to take my flaky business partner to court, but have never been able to serve him with papers. Don’t give up. The statute of limitations in Texas for civil cases is a leisurely four years. That’s an eternity. Take your paperwork and seal it in a file for safe keeping. And periodically take a look around – the creep might show up.  Even though you’ve written off the loss it doesn’t cost you anything to stay on the trail.  Assume you’re going to court, prepare accordingly, and be ready to win. Once you track the guy down, hit him with a cool, well organized declaration explaining how you’re about to sue him back to the stone age. The other guy may be lazy and dishonest (which is why he stole from you in the first place) but chances are that he’s neither stupid nor insane. If you have your ducks in a row then nine times out of ten the guy will see the light and pay up before he suffers the indignity of being dragged into court.  The small claims court process isn’t difficult. If you’re savvy enough to buy and sell houses then you’re savvy enough to manage a small claims court case (up to $10,000 in Texas). Go get a brochure from your courthouse and follow the instructions.

Continue reading Stay on the trail of dishonest contractors

Successful real estate investing is a long term game. Following the right strategy with discipline and perseverance will allow smart investors to weather the market’s cycles and build equity. Time and leverage are your friends.

But don’t underestimate the importance of the time part of the equation. In the past I’ve compared the performance of the real estate market with the stock market. For the disciplined investor, real estate performs favorably to the stock market over any reasonable period of time, but you’ll need a few years for the strategy to be effective. If you’re only going to stay in the game a year or two you might as well buy a mutual fund and call it a day. But investors with perseverance will see their wealth grow much faster by pursuing a prudent real estate strategy than they will betting on the stock market.  So to take advantage of time you’ll need a little endurance. Sticking with your real estate investing plan is a lot easier if you’re prudent about your decisions and keep your eye on some fundamental points.

Continue reading Real Estate Investing for the Long Haul

As investors we’re not out there spinning the roulette wheel; we’re looking at the underlying fundamentals and taking measured risks. That said, investors do need to take a view of the future in order to make decisions in real time – and BusinessWeek’s recent cover story gives the housing market a timely and even-handed overview.

You’ll see some of the boilerplate that you’ve read before, but pay attention to a reference to an influential paper written by Harvard economist Gregory Mankiw which back in 1989 predicted a precipitous decline in housing prices. The premise was that a shrinking body of first-time buyers along with a glut of downsizing baby boomers will collectively pull lots of demand out of the market, leading to an excess of supply and a sticky plunge in prices.

Continue reading A 25% drop for housing prices?

Being a good investor is all about having a vision for where you want to be, taking a view on the market, and running the numbers. When these three elements don’t line up then smart investors stay on the sidelines.  But when they do line up then it’s time to act.

Continue reading Five things that Real Estate Investors should consider when evaluating an investment opportunity

A reader who goes by the handle “Max” made a comment the other day that got me thinking. There’s a concept in pop business theory called the Peter Principle which states that managers tend to get promoted to their point of incompetence – taking on bigger and bigger responsibilities until they eventually get to the point where they’re over their head. And this, ironically, is the point where they tend to stick.

In discussing the concept of leverage, where an investor builds a profitable portfolio of investment properties over the year by occasionally executing a 1031 exchange, the Peter Principle might be relevant. As Max points out, you don’t want to get in over your head.

Continue reading Shop the two-for-one sales :: The Peter Principle in action

Lots of ink has been spilled on how our jittery market is impacting homeowners. But it’s hard to find anyone writing on the question that looms largest in the minds of most investors: what do I do now?

There, of course, is no single right answer to this questions – it will depend you’re your risk appetite, your local market, your time horizon, and your view of what the market is going to do next. But from where I sit I see five basic paths forward for investors in 2008:

1: Rebalance in the same market. This is what I’ll be doing this year. Investors Continue reading Five approaches to today’s soft real estate market

Don’t you just love free stuff? I know I do, especially when it’s 100% pure content…

So, let me give you some more…as promised

Yes, it’s the same report I told you about yesterday. The report is called “Search Engine Myths Exposed“ and it’s written by Jon Leger, one of the person’s I definitely look up to in the internet marketing industry.

Continue reading How To Rank Well In Google - Google Myths Exposed