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2009: Last great real estate investment frontier?

Be optimist or pessimist the numbers do not lie. What do the numbers say about the US real estate market in the last two years? Dismal, at best. John Burns, CEO of John Burns Real Estate Consulting, always gives grades in quick glimpse -and easy to comprehend- A, B, C, D, and F like most public school students his age and mine would have received for homework.

The not so surprising news is that I could find nothing in his report which scored an A. Also not surprising is there are plenty of D’s and F’s (we skipped E for some vapid reason).? Three particular grades should be of interest to every real estate investor and also should be understood why it is of interest.

First there is the D given to the existing home market. This means values are still declining while the existing inventory rose to 10.8% – that means lots of supply (increasing) and at best pent up demand. For the investor this is all green lights. Unfortunately Fannie Mae in some insane moment of cannibalism, or perhaps it was cannibisism, slashed the limit of properties on credit from ten to four. Bad move and a slice at the Achilles heel of the US economy. It is possible they are willing to re-look. All this points to a fantastic time to be a first time real estate investor.

Flying Fickled Finger of Fate

Next there is the F given to the new home market. We all know housing starts have hit the lowest number since reporting began in 1959. While 1959 was a banner year for planet earth that was still a long time ago and a lot of opportunity for bad housing starts have passed. Congratulations to 2008, you win the Fickled Finger of Fate award. What this means for investors is more opportunity for rehabbed properties. While the rules on flipping have changed (you really need to understand the rules before you think you’re going to be the next future felon on TV) you can still successfully acquire and rehab homes for decent profit.

Finally there is the F given to housing supply. With housing starts dipping to an even further record low of 625,000 this means people are stacking up in the homes of relatives, roomate situations in large complexes and more. The need is growing while the market is slowing. Positioning yourself for the future by acquiring one, two or even three single family investment properties in your area may just position you for some very substantial earnings over the next three to five years.

So it there were a category for investment opportunities I would see that as an A+ for the savvy mind. The problem with real estate investing over the last 8 to 10 years was the notion that “anyone could do it”. Sorry, if you cannot keep a job, forget to pay your light bill and have never balanced a check-book you really are not a good candidate to be a reale state investor. On the other hand, if you have 20% down (a very reasonable amount) a credit score in the higher six-hundreds, and patience you owe it to yourself to get into the pool while both ends are reasonably shallow.

Call me, let’s talk 866-946-0120 -Ken