The Coach's Corner
Credit-Crunch Creates a Foreclosure Market

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We've all been reading the headlines and the articles in which highly paid pseudo-experts are advising investors to stay away from investing in real estate during the current market.

But the cold, hard facts are that this is a great time to get started investing in real estate or, if you are already investing, to take the next steps to accelerate your real estate business.

What is a weak RE market?
Experts say that the U.S. real estate market is "weak"—which simply means that the supply outweighs the demand—and that the worst is still to come.

And adding additional economic factors like the fear of a coming recession, which was brought on by weak consumer credit, there is no indication of when the demand for real estate will increase.

However, it does not mean that a savvy investor cannot make money during this "weakened" real estate market. In fact, the current situation bodes well for an aggressive, creative investor.

Why is it good for investors?
Local real estate markets across the country are flooded with bank-held foreclosures, desperate homeowners who are still trying to avoid losing their properties, and families who need to upgrade, downsize, or relocate.

And when properties sit on the market for a long period of time, everyone is eager to make a deal.

If there is no perceived demand, prices go lower and lower. It's one of the basic laws of economics: When the supply is high, prices trend lower.

And because the value of a home is based on comparable sales, neighborhood values follow suit. It is possible—and is becoming more and more common—that a homeowner may owe more than his or her home is worth.

Pair that with the "credit crunch" information the media is "feeding" us, and it seems as if there are fewer "traditionally" qualified buyers—which opens more doors for investors.

Maneuver choppy waters
Smart investors know that now is the time to buy. Right now there is a huge supply of real estate out there and its all attainable if you know how.

Two ways to profit during this market are:

1. Concentrating on foreclosures. After the bank takes a property back and clears the title, they will offer it to the public.
   
   Watch local properties when they go through the foreclosure process. Learn the amounts of the foreclosure judgments, how long it takes to list these properties on your local MLS listing, and what the asking prices are.
2. Mastering your understanding of creative real estate techniques. Learn to think "outside the box" to make a win-win situation for the seller and for you, as the buyer.

Choose-to-fit technique
Lease options, seller financing, land contracts, wraparound mortgages—and even "zero-interest" mortgages—are all viable ways to successfully purchase a property—while solving the seller's problems. Be able to explain every offer you make to the seller, and why it can be a win-win solution.

As always, make sure you have a "team" of professionals ready—a financial advisor, an attorney, a handyman, etc.

You should continue to develop and to widen your professional team.

And also pay attention to your local marketplace because every market is different. In some areas of the country, foreclosures are rising.

In other areas of the country, the housing market has not been affected. Know your market and realize what profit strategies it will support.

Backup plan
Always have a backup plan. Did your flip "flop"? If so, be prepared to rent the property. It might not be your "ideal situation" now, but real estate can be a very forgiving business over time. So, if you make sure that your numbers work, sooner or later you will reap the rewards of your investment.

Who really knows what the market will bring? One thing is certain, though: Throughout its history, the real estate market has consistently grown upward. Cycles will happen, but real estate is a tried- and-true wealth builder.