Many Opportunities – Tread Wisely

There are many real estate opportunities out there given the collapse of the mortgage system and the American economy. With these  opportunities however, comes a need to proceed with tempered optimism.

Unfortunately, some of the opportunities were seen by get-rich-quick-schemers as a way of quickly producing massive profits from real estate. An example is the many ‘no down payment’ loans done for ‘investing’ early on before the banks and mortgage lenders started clamping down on this. Soon, investors found themselves with debts higher than the value of the properties as property values dropped due to the number of foreclosures. This caused investors to default and foreclose, causing a vicious cycle.

As with all investing, keep the following in mind:

• If the opportunity seems too good to be true, it likely is.
• Are the numbers and forecasts in a real estate investment deal conservative, particularly with regards to required reserve cash and vacancy rates?
• Is the opportunity seen as a long term, solid growth investment, or a quick ‘cash grab’?
• Real Estate, historically is a long, solid (but often) slow investment vehicle. It has historically averaged less Return on Investment (ROI) than say stocks due to the perceived and generally actual, reduced risk compared to stocks.