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The slowdown in the real estate has sent some investors fleeing from the market. But those bailing out may be missing opportunities, say the authors of Making Hard Cash in a Soft Real Estate Market (Wiley, 2007). There are still big bucks to be made — even in a down cycle. In fact, authors Wendy Patton and Justin Ryan argue that “more money has always been made in a down market than in an up market.” They highlight how investors can snag the best buys, master market-timing and risk management, and prepare finances — all to better help you become a savvy investor in any type of market.

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From the Book: 5 Investor Tips in a Slower Market

Slower markets can offer rich opportunities for investors: real estate sellers are more open to negotiate and lower home prices — and combined with low interest rates — can help you get properties at bargain levels. Yet, some buyers are reluctant.

“The market may not look perfect,” the authors write. “This is why prices haven’t taken off yet” — and why you want to get in before they do! The book offers the following tips:

1. Timing is everything. Enter the market cycle early. “When it’s quiet, when the media isn’t saying ‘record levels of appreciation,’ that’s when you want to jump in,” the authors write. As billionaire oilman J. Paul Getty once said: “Buy when everyone else is selling and hold until everyone else is buying.”

2. Get financially ready. Before you buy, consider holding costs, tax implications, and cash flow potential. Many things can go wrong when buying investment properties — such as a vacant rental or a property that won’t sell. Have cash reserves (get a partner if you don’t have any) and you’ll be prepared to ride out any market cycle. Identify your risk level and what you want: For example, an investor who wants to turn a quick profit with low holding costs would want to sell their new-home property before construction is complete. On the other hand, an investor looking for a bigger return with less capital gains tax would want to hold the property until after construction is complete and keep it as a rental property for at least one year.

3. Buy and hold. In a distressed market, this can be a smart move. A buy-and-hold strategy can help give the property an opportunity to appreciate over time. Buy at the right price, though. Compare the home’s price to what homes are selling for over a reasonable time period in that

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Posted on December 19 at 04:17 PM | Permanent Link | Add a Comment (3)

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Think you have what it takes to flip a house or guide clients through the process? In Flipping Confidential: The Secrets of Renovating Property for Profit in Any Market (Wiley, 2007), Kirsten Kemp reveals how to avoid the common, costly mistakes of amateur flippers. Kemp, who you may know as host of TLC’s “Property Ladder,” talks from experience as she lays the groundwork for a high-profit flip — how to choose the best property, decide what improvements to make, set the price, and stage for maximum impact.

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From the Book: 5 Musts to Flipping

Kirsten Kemp has experienced six-figure profits and six-figure losses in her years of flipping houses. She shares some valuable lessons she’s learned along the way, with the goal of helping you avoid making a “flip-flop.”

1. Find stagnant listings. Track down undervalued properties — homes that have languished on the market with no activity — and then make a lowball offer. Look for a property with problems that would repel other buyers, but aren’t too major. Before you snatch up that eye-sore, though, get an inspection and estimates for work you’ll want to do. That will give you a better picture of what you’re getting yourself into.

2. Enhance, don’t rebuild. Put down that sledgehammer. Your goal isn’t to tear everything down. Think simple — repainting, cleaning, and getting rid of that shag carpeting. Restain the kitchen cabinets instead of buying new. Add custom window treatments or crown molding instead of replacing all the windows. For larger projects, look for changes that will bring the best return on your money, such as adding a fourth bedroom or turning an unfinished attic into a den.

3. Don’t get too attached. Getting emotionally tied to a house makes it hard to stick to a tight budget, which is essential for a profitable flip. Kemp tells how she lost a major chunk of change on a flip she bought for just under a million dollars by spending $900,000 on personalized improvements she would want in her own dream home. The property went on the market for

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Posted on May 25 at 11:50 AM | Permanent Link | Add a Comment (14)