Options as a Strategic Investment » Tools

Creative Real Estate Investing for Flat and Down Markets – Beating the Bursting Bubble!

admin — Tue, 19 Jan 2010 11:25:11 +0000

I find the current media coverage about the “Bursting Real Estate Bubble”to be priceless for those of us who are investors. They talk about falling house prices which will only bring gloom and doom for homeowners and real estate investors a like. I can understand where they are coming from; having little or no knowledge about investing and that is OK, because it just creates more opportunity for you and I. Real estate is cyclical and always has been. There was a large national article published that stated Las Vegas real estate had completely capped out and there was no place for it to go but down. Does that sound familiar? If so, you may want to think again. That article was published nearly half a century ago! Has real estate gone up in value in Las Vegas in the last 50 years? You bet, and not just a little! Now does that mean real estate is going to keep going up like it has the last few years? I wouldn’t plan on it, particularly in the short term, however that’s what makes this media coverage so invaluable. *It creates fear that scares off a lot of people from investing (creating more opportunity). *It eliminates aggressive scam investments (as we saw rampant with builders in Florida and Las Vegas the last few years). *It makes people question the value of their properties (creating more flexible sellers). Here is something to consider: do you know any ultra successful real estate investor that is afraid of flat or declining house prices? Quite to the contrary, knowledgeable investors understand when markets are flat or down it just weeds out beginning investors, makes people panic and means more opportunity. What’s important to understand is just as real estate is cyclical, so are the amount of buyers and sellers in a given market. When markets are up, you’ll have to spend more time finding motivated sellers, but you have the benefit of appreciation on your side. When markets are down, you can’t depend on appreciation, but you’ll have a lot more motivated sellers to work with. In fact, when markets are down, you usually have to let “good” deals go, so you can take advantage of the “best” deals! We’re not just buying properties and hoping that they will appreciate or go up in value. That’s not investing, that’s speculating! Your completely dependent on future growth that is entirely out of your control. That’s a conventional mindset and will not work in flat or declining real estate markets especially in the short term. Like any business, you need to make well calculated decisions. In real estate, that includes making creative, risk free offers and setting up your exits appropriately for the specific circumstances. There are better and more creative real estate investing strategies for down and soft markets like assignments, lease options(as a seller or a “sandwich”), foreclosures, short sales, wholesaling and “subject to” arrangements. But even when doing rehabs or fixer uppers (which are not typically recommended in down markets) there are still good ways to make a good profit with the right system and proper planning. For example, let’s say you are in a market depreciating at 10% a year, you would need to factor in the time to make the rehab repairs plus the time to sell (with a cushion), then subtract market depreciation during that time. So if an area was depreciating at 10% a year and you had a property that would take 2-3 months to fix up and 2-3 months to sell, you would want to subtract an additional 5-6% from the retails sales price when making your offer to a seller. There’s really no issue with doing rehabs of fixer uppers in down markets, you just need to factor in depreciation accordingly. This is why faster, lower risk, more creative real estate investing strategies are better to use during market declines. The point is market conditions will not determine your success; it’s how you approach your market and do what is appropriate for the current trends. When you structure risk free deals and make calculated decisions, the market conditions will never be a determining factor of whether you make money or not! Copyright © 2007-9 Creativerealestatehelp.com. All rights reserved.

Real Options Analysis: Tools and Techniques for Valuing Strategic Investment and Decisions, 2nd Edition (Wiley Finance) (Hardcover)

admin — Wed, 06 Jan 2010 18:53:49 +0000

“Mun demystifies real options analysis and delivers a powerful, pragmatic guide for decision-makers and practitioners alike. Finally, there is a book that equips professionals to easily recognize, value, and seize real options in the world around them.” –Jim Schreckengast, Senior VP, R&D Strategy, Gemplus International SA, France Completely revised and updated to meet the challenges of today’s dynamic business environment, Real Options Analysis, Second Edition offers you a fresh look at evaluating capital investment strategies by taking the strategic decision-making process into consideration. This comprehensive guide provides both a qualitative and quantitative description of real options; the methods used in solving real options; why and when they are used; and the applicability of these methods in decision making.

From the Inside Flap

Real options analysis has become a key management tool for many of today’s businesses. It is an accurate (more…)

Being Creative – No Money Down Investing Strategies

admin — Fri, 04 Dec 2009 11:22:54 +0000

There are a lot of books and programs that talk about doing real estate with “no money down”, but it is important to understand what they are talking about here. If someone says nothing down strategies don’t work, it just means they don’t understand what nothing down means or how to do it.The term “no money down” does not mean “no money is transacted”, it just means that someone else’s money is transacted. It does not come out of your pocket, piggy bank, or savings account. In fact, people without a lot of personal cash or savings are sometimes better off because they have to approach the real estate investing business differently. They start off on the right foot to making money faster than those that use conventional methods such as a traditional bank loan and/or putting down a large chunk of their own money simply because they have to. When you are starting out and don’t have a lot of investment capital, you will want to target properties you can buy without having to get a loan in your own name. As a creative investor you will want to look for motivated sellers so they are willing to work with you using creative financing methods so you don’t need to get a loan or put up a large down payment. This also allows you to create a win-win situation that will work for you and solves the sellers problems.Sometimes having a lot of money is a detriment because those who are not forced to be creative miss out creative real estate deals. Even if you have a lot of money start being creative. No matter how much you have, if you keep tying it up in real estate purchases you’ll eventually run out. This is why you hear some real estate investors are “equity rich” but still “cash poor”. They have all these assets on paper but they are still living check to check.In addition to creative ways of getting money there are many creative real estate strategies that are essentially no money down methods. Some examples are real estate assignments including flipping and wholesaling, Subject to arrangements, and certain lease options strategies. Especially if you are starting out and don’t have a lot to work with, one of the best ways to make quick cash is by learning the right real estate investing strategies. This will allow you to eliminate a lot of inherent risks since none of your own money or credit is at risk and you never take ownership of property. With current real estate trends this is also one of the best routes to take and no matter how you define it, when done correctly it is a solid creative no money down real estate solution.