My last two articles as the Kansas City Real Estate Examiner dealt with the future of Commercial real estate and my predictions for 2010.
Commercial real estate forecast for 2010
The upside to commercial real estate in 2010
So; is real estate investment dead?
In this article I hope to shed some light on the investment real estate market for 2010. While some elements of commercial real estate are also considered investment property, the most common form of real estate investment is residential or multifamily rental property.
I have been in the field of investment real estate since the mid 1980's and I have seen trends come and go, some of them nearly overnight!
In the eighties I had friends reading Robert Allen and massing in hotel rooms to get the latest dope on how to buy real estate with no money down. Then came Carleton Sheets hawking his books, tapes and information on similar schemes. All-in, all they were doing is selling information, sort of like those ads you see in the back of the paper offering to teach you how to make money at home---- "just send me $9.95 and I'll show you how to make money at home".
In reality most of the get rich quick real estate gurus made little or no money in real estate, instead they made their money off selling tapes and books. Usually with photographs of themselves on the cover by a luxury car with a huge mansion behind them.
All those hoaxes have now moved to the Internet, so they can take your money there. The no-money down stuff mostly went by the wayside with new rules and regulations on mortgages.
So how does someone get into real estate investing and make it profitable in the coming year?
Location, Location, Location... I know you have heard it before, but location is key if you have money then focus on location. With the current market collapse properties in desirable areas are at all-time lows. The fact it is so much harder to get a mortgage makes it all the better if you have CASH. Name your price, take it or leave it and move on.... Do not get emotionally attached to a property.
2010 will be the era of the CASH INVESTOR! Huge returns will be found by those who have the cash to make the deals. Flipping will be where the big money is for the cash investor while there is still government money being poured into the market.
Rent to Own and Owner Finance will also continue to grow in popularity and unless the "Credit Crunch" begins to abate, it may be the wave of the future.
OK so you don't have cash and you can't get a mortgage... well, it is going to be much tougher, but it is not impossible. In cities like Kansas City, St. Louis and other struggling metropolitan areas homes are being abandoned at record rates.
You can often pick these homes up for a few dollars, the problem is they usually have been stripped of anything of value, including the kitchen sink.
Kansas City has the dubious distinction of being "The Most Abandoned City In The Nation". The City of Kansas City, MO is completely overwhelmed with vacant and abandoned homes they often will offer them to anyone who wants them. If you can track down the owner through the county tax records you can see if they will quit claim deed it over to you, often for a few dollars or even for free, just to be rid of it.
The drawback is that the home may come with liens by contractors who are yet to be paid or tax liens that will put your new property on the courthouse steps if left unpaid.
The only way to be sure that is not the case is to have a title search done and usually you should consider buying title insurance before recording the deed.
Cash is King; and in 2010 if you have it, you can name your price!