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Barbara Corcoran on CNBC: August 27, 2007: Buy Right and Hold for Five Years

Barbara Corcoran, past contributor to Active Rain, was on CNBC this morning in a panel discussion about the future of real estate.

Ms. Corcoran's advise was something we've heard her say before:

1- She buys in up and coming areas around her hometown of New York- stick to your knitting

2- She buys with 20% down- prudent use of leverage

3- She makes money when she buys right- getting the right price

4- She holds for five years and "makes a lot of money when she sells"- real estate is a mid to long term investment.

5- During times of confusion, great opportunities pop up- Barbara mentioned that the owners who wouldn't return her calls and e-mails last month are doing it today.

Ms. Corcoran was challenged by the young interviewer,

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Posted by Brian Brady- America's VA Home Loan Broker on 08/27/2007 12:19 PM

Comments (47)

barbara corcoran

Originally posted at: America's #1 Mortgage Broker: Barbara Corcoran on CNBC: August 27, 2007: Buy Right and Hold for Five Years

47 Comments on Barbara Corcoran on CNBC: August 27, 2007: Buy Right and Hold for Five Years

AUG

2007

Buy right - hold tight. It's a valid concept and one that gets ignored in relation to all the 'successful flippers' that the general public sees on TV. Ms. Corcoran is one smart cookie.

Interesting post,

Sean Allen

Whether it's stocks or real estate, the concept is simple and most importantly---it works. Day-traders and flippers seem to love to tell you about how much they made on a good day---they rarely tell you about all the flops.

Thats what you have to love about real estate...if the market is up, you can make money. When the market is down, you can make money. And when there is confusion and no ones knows what is going on, you can still make money.

Thanks for the information.

Of course it's boring stuff. Warren Bufffet is boring. He is asked continually what is his secret. HE DOESN'T HAVE A SECRET. He does the same thing. He buys low when there is confusion and he holds for the long term. He buys wisely.

Kinda like losing weight...you have to eat right and exercise-the quick fixes never work out over time. But solid advice like this isn't sexy enough for the liberal news media.

Brian that is the secret to wealth in real estate. Buy and hold long term

Brian

I keep telling everyone I talk to that this is a buying opportunity.

Brian - Your last sentence says it all!

Brian,

This isn't rocket science. People and the media want to make this more complicated than it really is. The ones who will win in this market are the savvy buyers who are making the most of an opportunity. Thank you for your contributions.

Brian, great article. Everyone needs to be reminded of this every now and then.
I wish i would have bought Alaska from Russia in 1867 for $7.2 million.

Barbara Corcoran is a real estate rock star in New York! And yes, isn't "Buy low, sell high" a basic of investing in anything? Thanks for your post!

Brian, Well done. Not always in agreement with Ms. Corcoran but she is well known and widely respected. Didn't see the show but it sounds like it was right on the mark.

Simple is always a good thing. It reminds me of one of my favorite quotes; "Nothing will work unless you do," from Maya Anqelou. While the sky is falling for some Mrs. Corcoran is working, using basic economic principles and P.M.A.

You can never hear enough Real Estate 101. Barbara Corcoran is great. Good post.

"Buy low, sell high" what a concept, it worked yesterday, it will work tomorrow.

Very good. But most will miss the boat, waiting for some imaginary sign from the sky guaranteeing they'll make zillions of dollars :)

I agree except in Manhattan where Barbara built her empire....It's still "buy high and sell higher" here.

In 5 years it will look like you bought low. lol

Advice given for years. Put money down and hold for minimum 5 years. Now is an IDEAL time to invest, assuming you have the cash to float it for '5' years. If it can be rented, all the better.

There are still some out there with a 'flip' mentality.... I tell them they are crazy. This is a buy and hold market.

Nice post Brian.

Don't WAIT to BUY real estate . . . . . . . BUY real estate and WAIT! It does work every time.

great post

Only during a boom do people think "investing" is worthwhile. These are the people who call themselves investors, but are now facing foreclosure of multiple properties. True investors know the secret to wealth is holding long term. We just contracted to have a home built. Are plan is to live in it for 5 years, assess the market, then either sell or hold for a longer period. Who know what will happen, but the longer we hold the better.

Brian,

Buyer's are setting the prices in our market, big time. It's a great time to be a buyer and seller's who won't listen to their REALTOR® and "hold out" for their high price because they know their built-in alarm system, back-up generator, etc. makes their home worth more than comps and an appraisal would say, aren't going to sell. There are too many homes to choose from and seller's who need to sell and will make the deal.

If you don't have to sell, take your home off the market.

Here they are talking about this on cnn.

http://money.cnn.com/2007/08/27/news/economy/kunz_homesale/index.htm

Since we do just that when we are not dealing with our regular clients...I can't agree more.By now and hold ...no flipping in this market unless it is at an extreme discount. More money down or cash if you can and if you can hold then it is the best recipe.

We alwyas buy low and flip high...no we have to change our strategy and hold it or rent it.

Brian, pretty much what we know and now maybe others will know, too. Thanks for sharing.

Thanks for sharing Barbara's tips. It's solid advice! I'll be passing it on to my real estate club.

Go against the herd in any type of market. You make your money when you buy.

Pretty much true Brian but I have dealt with a real estate investor that has made a lot of money by buying distress or trustee sale properties and flips them immediately. For the average buyer not buying distsress or trustee sale properties yes, hold for 3-5 years or more makes sense.

Seems to me I've heard something like this, before.

I would question: "20% down- prudent use of leverage" doesn't sound like leverage to me! At 95% LTV she could buy 3 more properties and let the banks share the risk.

Now if she'd said with 20% down they will have a postive cash flow, I'd supot every word. There is alot more to consider than she or you could add here.

Blogging in the middle of the day? Slow day at the office?

Bill

Seems prettry straightforward and easy to understand to me. Why does the media try to make it more complicated? Never mind...I know. Good post Brian, and wise advice for those wanting to invest and make money in RE.

Jeff

I buy with cash. Rehab. Then finance and pull ALL my money out. Then rent with positive cash flow and wait and wait and wait. Maybe some day I'll actually sell something:)

Cash is still king. Buy-low, sell-high. Pretty simple..... but I think the botton line is: find an opportunity and re-assess annually. Barbara ain't no dummy.

Brian, She is right. Buy it right and in this market in South Florida you hold it for 5 years and watch out..

The problem is real investors that buy and hold are not seen on TV every day, flamboyant and arrogant. They are behind the scenes... and that's just fine with them.

Sounds like good, old fashioned advice that works!!!!!

Brian, another great post! I had a client call to tell me she and her son wanted to flip a property. I told her noooooooo. So we came up with another plan. They will buy a fixer in December, her son will move in for a few years while they fix it up, then will sell it. Since her son needs a place to live, why pay rent on an apartment? This is a much better plan with a greater chance of success.

Brian,

Thanks for the post. I missed the interview. Although those of us in the business understand this, it can't be stated enough so that sellers and buyers can wrap their arms around this and move on!

Excellent perspective. On our radio show, we repeat, ad nauseum:

Make Money When You Buy
Break Even or Better While You Hold
Make Money When You Sell

For the longest time, everybody would act like that's some foreign exotic concept. Or worse; quaint.

Real estate is a commodity. Commodity prices are demand-driven. Ms. Corcoran is right on the money!

Buy and hold has always been the best strategy but I have seen a lot of homes selling at or below the price they paid 5 years ago.

real estate is a mid to long term investment.

You don't say? Problem with her strategies, as I see it, is that gurus cannot make $995 for the book and tape set to explain it. It fits on one 8.5x11 white sheet of paper. :)

Thanks for the recap Brian. It's just common sense.

AUG

2007

Brian:

A nice, easy reading book by Barbara Corcoran is If You Don't Have Big Breasts, Put Ribbons On Your Pigtails. A NY contact of mine, a prominent RE developer sent me a signed copy! The book was interesting reading and it did cover the concepts that you blogged about. Buying right; (BUYING ANYTHING RIGHT) has always made logic and sense! The idea of "holding" for 5 years is somewhat convoluted, especially in this market! I know people that wish they had sold within 2.5 years, but held on because greed got the better of their normally good business sense. In the above reference "BIG BREASTS" book~ I remember that BC went out and bought the most expensive RED overcoat, that overcoat became her "signature", she bought it from the proceeds of her "first" commission checks! Her thoughts were that "You only get one chance to make a good first impression". Barbara Corcoran made many references to "what her MOM would do and the lessons of life that she learned from her MOM. The book is easy reading - I would highly recommend it, especially for newly licensed female agents. The tips and tricks were and still are holding true today.

Mott Marvin Kornicki, REALTOR®

Former Active Rain Member (20X Removed)

Sunny Isles Beach, Florida

Ric Edelman was on Squawk Box this morning and said almost exactly the same thing, my favorite line was ...

"I was talking to a client this weekend whose house had been on the market for a year. He said 'I'm taking it off the market.' Now that will get it sold."

Real estate investing is like a lot of things. It looks easy, and the "rules" are easy to understand. But too many of us make it so darn hard.

Mott - I'm in the middle of the book and I would say that the book is great reading for ANY new agent - regardless of sex.

Barbara Corcoran is one of my role models. Thanks for sharing her words of wisdom. Sometimes we try to reinvent the wheel, but what we should really be doing is the same old stuff.

SEP

2007

"market has shifted downwards and sellers need to readjust their prices to meet buyers' expectations. " I was just in Hilton Head this weekend- a market that exploded and is now hurting. Almost every other house on the street was for sale at the beach. Sometimes you wonder why don't sellers understand they've made their $$ and price the homes to sell.

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