"Real Investor"... or ... "On Trick Toni"...?

I'm hearing a lot of subtle grumbling from people about the "slowing down of the real estate market", and along with it a fair amount of whining, and most of the whining is coming from the folks who just showed up at the real estate investor party.

First, the "real estate market" has not slowed down at all. Yes!, There are certain segments of the market which have started to cool off, such as condo's and new home sales in certain markets. The types of products you would expect to see cool off when you have had a long period of endless supply and a recent slow down in demand.

In any given market place there is a natural pace of annual absorption. If every year you sell 1,000 oranges to a certain community, then selling 1,000 Plus "X more" oranges every year will eventually catch up with you, because there are only a certain number of oranges the community can eat, unless the community is growing. While many areas of the country have been growing, they have not been growing at a rate fast enough to absorb everything that is being offered. This is particularly true in markets where growth is dictated by the influx of retirees or second home purchasers versus job growth. You can change your mind about a second home, or retirement community much faster than you can change your mind about moving to a region to take a new job. So what happens if you are the last person to come into town with a truck load of oranges when there are already too many vendors showing up...? "Yes!, you have a sale and make sure you aren't leaving town with a truck load of grey, oozing, orangie things".

Demand falls when the price goes above a certain point. In this case of oranges it would probably the "sticker price" of oranges versus a comparable alternative, such as tangerines. If the price of oranges goes significantly higher than tangerines, people will switch. In real estate, the "sticker price" is not the most important number, or more specifically "numbers". We have all been amazed at how home values have shot up each and every year for the past 5-7 years by as much as 30%!

However, in real estate, very few people, when they are buying, pay attention to the "sticker price". I learned long ago from Lonnie Scruggs, that the two most often (and most important) asked questions by home buyers are: "How Much Down, and How Much Each Month", which then gets translated into a price, courtesy of your friendly neighborhood mortgage broker.

So what does this all mean...??

It's probably time to pull down one of the other "umpteen" courses on real estate investing, and learn a new strategy or two. the reality is that most of what we today call "Creative Real Estate Investing" was born during the late 70's and early 80's when the residential real estate market (in every category) was in the tank! High interest rates - NO, really high interest rates like 18-22%, plus negative job growth meant you had to be "very creative" to make money in real estate.

It is very interesting that most of the whining comes from newbies and people in the real estate game for less than 3 years, while the more experienced investors, the "real investors" are off in a corner, smiling like fat content (Cheshire) cats. Most of whom had predicting this day would come when the "easy money days" would come to an end and the real creative strategies would make you rich.

Instead of whining, now may be the time to get to know some of these more seasoned players get to know what they know about what you do to profit when a market turns...

A lot of the strategies that were "Flawless" over the past 3-5 years are not going to work (as well) over the next 3-5 years. Pre-construction investing, rehabbing and wholesaling deals with huge paydays (as in six-figures on one deal) are not going to be the "hot ticket" in many markets going forward. Subject-to, Preforeclosures, short-sales and good old fashioned land lording are already starting to "sizzle".

The question is, did you get in this business to be a rehabber, or did you get into this business to be an investor? There is a difference between being a Real Investor and a "one trick tony".

The party is not over (at all), it's just moved down the street...