Here we are practically half way through the 2010 year -it appears as if we are in a state of flux. We have a good half of expansionists stating ‘Doom & Gloom’ and the other half stating we’re ok, gaining traction, and will move forward in a positive manner. Let me guess -after these last couple years your pocketbook is lighter, expenses are up, and your income & incoming cash flow is much tighter? Believe me -I share your pain.
I will tell you that you’ve got to ‘rise above the occasion’ and take control of your situation. I know so many people that react to the situations that hit them rather than be proactive to their circumstances. Let me warn you -if you are just passively reacting to your investments and business operations, you are slowly dying like a tornado whirlwind of water down a bathtub drain.
From a housing perspective, I’m seeing the continuation of two distinct trends. Due to the small percentage of investors whom are able to get permanent financing, the buying and selling of rental real estate is a challenge. Typically only three distinct types of real estate investments are moving:
- Deep Discounted Property
- Owner Financed Property
- Prime Location Property
Think about those three choices. For those with cash -they have their choice. For those with no cash and/or private financing, they to have their choice. Didn’t expect to hear that did you? Let’s focus on what you can do -ok! Owner financing and private money lenders will give you the ability to buy. If money is REAL TIGHT consider wholesaling -even an owner finance deal (read this win/win/win deal). Folks if you don’t pull the trigger you won’t have the investment to seize future opportunity. Focus on what tools you do have:
Use them. If capital isn’t part of the equation, then neither is the word passive. For wealth to be created tomorrow, your time and skills (called blood, sweat, & tears equity) will be required today. If you are not for that program, the odds are against you -prepare to be part of the average statistics for Americans and use your time to invest in mutual funds -not that that’s necessarily bad. Money is being made out there with rental purchases made today -are you willing to do what’s required of you?
The more labor intensive trend of rehabbing to retail is still going despite the ‘Well Known Overhang” created from the Housing Tax Credit Expiration. Folks its not like it shouldn’t be a surprise. I can tell you this. I am seeing real estate investors successfully continue to move retail houses. One needs to sharpen their skills (click this for last rehab article) and consider moving up the chain in the entry level housing market. Locally it is believed the $99k to $159k market may bear the brunt of the slowdown and that the entry level buyer has more credit & capital to continue on in the $160k to $249k market.
Ok now -are you falling prey to the guys saying sell everything and buy gold due to the coming Armageddon? LOL -unless your storing the gold in your home (not recommended btw) do you think that slip of paper saying it’s stored in NJ, NV, or Istanbul is going to be worth a hill of beans -assuming Armageddon occurs!?! Not to mention -you’ll derive ZERO income off that purchase while you own it. Think about that. Focus on cash flow with discounted models (ie: don’t over-inflate rental rates & underestimate true cost of expenses over time).
So what are you going to do today to TAKE ACTION?
Whether you need to focus on debt reduction, collecting rent, filing that long overdue eviction paperwork, fixing the leak in the roof, calling buyers, sellers, lenders, etc., or reading an annual report/10-K, you need to start now. True wealth is not created passively. It is created with your blood, sweat, and tears equity over time by taking proactive action.
Don’t let the Doom & Gloom freeze you in your steps. Newly created wealth that will be realized 3, 5, 7, 10, 15 years down the road is being created by those willing to pioneer during today’s uncertainty.
Are you going to be one of those pioneers -or is it just going to be another night watching some reality based TV show?
Tyler McCracken – A NC Real Estate Investor
June 12th, 2010