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

By Brian Brady

Commercial Real Estate Agent with Matthews Capital Markets NMLS 2415712

August 27, 2007 05:19 AM

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,

READ THE REST AT www.MortgageRatesReport.com

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Suburban Chicago Illinois Real Estate

Suburban Village Realty - Barrington, IL

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

Aug 27, 2007 09:20 AM

George Tallabas

RE/MAX Advantage - Nampa, ID

Idaho Real Estate

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.

Aug 27, 2007 09:23 AM

William J. Archambault, Jr.

The Real Estate Investment Institute - Houston, TX

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

Aug 27, 2007 09:36 AM

Jeff Dowler, CRS

eXp Realty of California, Inc. - Carlsbad, CA

The Southern California Relocation Dude

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

Aug 27, 2007 10:30 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

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:)

Aug 27, 2007 10:52 AM

Doug Lindstrom

eXp Realty - Loveland, CO

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.

Aug 27, 2007 12:14 PM

Matthew J Blum - (retired from the business)

Palm Beach Gardens, FL

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

Aug 27, 2007 12:36 PM

Erion Shehaj

Signature Real Estate - Houston, TX

Houston Real Estate Broker

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.

Aug 27, 2007 12:41 PM

Chris Tesch

RE/MAX Bryan-College Station - College Station, TX

College Station, Texas Real Estate

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

Aug 27, 2007 12:54 PM

Kelly Sibilsky

Licensed Through Referral Connection, LTD. - Lake Zurich, IL

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.

Aug 27, 2007 01:26 PM

William Collins

ERA Queen City Realty - Scotch Plains, NJ

Property and Asset Management

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!

Aug 27, 2007 01:39 PM

Tom Armstrong

Benchmark Fin. - Temecula Real Estate, Temecula Mortgage - Temecula, CA

Temecula Mortgage ZERO Down

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.

Aug 27, 2007 01:51 PM

Eric Kodner

Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN

Wayzata Lakes Realty: Twin Cities, Madeline Island

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

Aug 27, 2007 01:54 PM

Mike Russell

Mike Russell Real Estate Group - Overland Park, KS

Overland Park Kansas Real Estate

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.

Aug 27, 2007 02:28 PM

Chris Lengquist

Ad Astra Realty - Olathe, KS

Kansas City Real Estate Investing

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. :)

Aug 27, 2007 04:30 PM

Irina Netchaev

Pasadena Views Real Estate Team, Inc. - Pasadena, CA

Pasadena CA Real Estate

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

Aug 27, 2007 04:45 PM

Anonymous

Mott Marvin Kornicki, Broker • Waterway Realty, LLC • 305.935.3

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

Aug 27, 2007 11:37 PM

#44

Toby Boyce

C.G. Boyce Real Estate Co. - Delaware, OH

MBA, Delaware Ohio

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.

Aug 28, 2007 12:41 AM

Ginger Wilcox

Sindeo - San Francisco, CA

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.

Aug 28, 2007 01:52 AM

Tracy Santrock

Santrock Realty Group Inc. , - Cary, NC

Raleigh - Cary Broker

"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.

Sep 03, 2007 02:04 PM