Category: Real Estate Investing
Posted: 4/2/2012
Why buying investment properties is a great idea now
By John Dixon
It’s an unfortunate fact of life -- and a reality of human psychology -- that we read and hear the most about an investment class in the late stages of a cycle when all the easy profits have been made and the risk is at its highest.

That certainly has been the case with virtually all types of real estate. In the mid-2000s, you couldn’t escape the flood of books, videos and seminars telling you how to make your fortune in real estate. Invariably, these materials featured a photo of a smiling, newly minted real estate guru promising to reveal the secrets of how he made his fortune.

Even worse, a lot of them promised to show the secrets of getting real estate with little or no money down. I suspect that in our business of selling bank-owned properties, we’ve probably sold some properties these guys used to own.

The real tragedy is that now’s the time people really can make money by investing in real estate. Many properties are selling for a fraction of their former prices, and those who are in a position to build up a good portfolio now will be in the catbird seat when the economy comes back to life.

During the boom, thousands of developers created subdivisions all over the country to accommodate what seemed to be an insatiable thirst for new suburban homes. Commercial developers built shopping centers and office buildings that relied on growth that was about to come to a screeching halt. Individuals borrowed too much money -- much of it from lenders and brokers who were less than scrupulous.

Investment fashions may come and go, but here’s one truth that never changes: Your rate of return depends what you have invested. The less you pay for your investment, the higher your return on it will be, whether you’re buying it for rental income, resale or future construction.
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