Real estate newbie

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Actually no.


This is the time of the cycle that the true real estate investors pray for.

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LOL, not even near the bottom yet.

Anything the op buys now he can buy at least 10% cheaper in a year, and thats being conservative.

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In my experience this is a typical response from someone on this forum that doesn't do any real estate investing. Now is the time to invest in real estate. Most people think that you can't make money in REI in down markets. On the contrary, down markets are exactly where you make the MOST money in REI. Thats because in down markets you can MAKE BETTER DEALS.

The misconception that one should avoid REI in down markets stems, I think, from three fundamental misunderstandings about REI. First, people seem to think that RE investors mostly make money through appreciation. In fact, most serious RE investors look at appreciation as cream - profits come from either positive cash flow (creating income) or buying below market value (creating equity).

Second, people seem to have the idea that if you pass on a good deal now in order to buy for 10% less next year, that you did a real smart thing. Thats not necessarily true. If you could've bought the property for 30% under market value, improved it, and sold it for 100% of market value 2 months later, then obviously you did the right thing buying now rather than waiting. Besides, we don't really know if the prices will go down or not. We're just guessing.

The third major misconception stems from the idea that RE markets have anything to do with making good deals. Market determine the value of a property. They have nothing to do with the price that YOU might pay for a SPECIFIC PROPERTY right now. In other words, if you find a sufficiently motivated seller, you can make a deal that is so good that even if the market deteriorated 10% in one year, you can STILL MAKE MONEY. That happens if, for instance, if you buy for, say, 20% below market value.

I detest the attitude of some people on this board sometimes. I don't try to give anyone stock advice. I don't know [censored] about stocks. It just seems so crazy to me that everyone appears to be a real estate expert, despite the fact that many of the responses to RE questions are plain wrong. Being wrong isn't necessarily the issue. Its the attitude of 'you're an idiot of you want to invest in RE'. Thats ridiculous. I think lots of people here would benefit from asking questions rather than making statements.