Investing in Down Marketing Real Estate: Risky or Smart Choice?

With the foreclosure firestorm, the mortgage meltdown, the credit crisis, and a receding economy, many investors are worried about investing, let alone investing in real estate. But what better place to invest than in real estate. We all know (or at least should know) that real estate will eventually bounce back; it is not a matter of if but a matter of when. There are risks in every investment, but considering the volatility on Wall Street right now, is investing in real estate a risk compared to the fluctuations of stocks, bonds, and even gold? Being smart is what will get you ahead in these troubled times and nothing is as smart as purchasing things people will need while the purchase price is incredibly low. Right now, it is a buyers market out there, and you are that buyer. There are houses, apartment buildings, farms, businesses, and bare land that is up for sale for incredibly low prices; perhaps even historic lows. There are more sellers now than have ever existed at one time; why not take advantage of the situation? Sellers will be desperate to unload their over priced land or houses and even people who are up side down on their mortgage will be willing to sell short just to pay off at least some of their debt without losing everything. You know that new housing starts are at a 17 year low, so there’s not likely to be any competition from new houses that will water down your appeal when the market does eventually bounce back from this cycle of panic. Down markets are, therefore, a blessing for the investor; let us look at it systematically:

1)      prices are near or at historic lows. This means awesome deals for you, the investors. A 20% discount is about average for asking prices these days, compared to at least a 10% premium a few months ago.

2)      There are literally hundreds of markets in hundreds of cities all across the United States of America. You can cherry pick the properties you want and leave the rest for others to scrabble over when the market does make outward, visible signs of recovery. You’ll have been ahead of the game long before every one else

3)      The stock market isn’t going to be a refuge for investors. Stocks are volatile as companies find it hard to borrow and make a profit, variable rate bonds are in the tank, and even gold – the refuge of historically bad times – is slipping in price, so where are you going to invest your money other than real estate?

Real estate in a down market is a long term investment; there are very, very few opportunities to flip a house or building for anything approaching a profit for at least the next year. Buy it now, rent it out if you want to, and then sell it when the market bounces back and you’ll not be sorry you invested in real estate in a down market.