Ignore the Fear and Loathing in the Real Estate Market

A famous quote by Theodore Roosevelt is a good one to look to in times like today. "In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing".

It is overwhelming right now...everyone is talking about the pain in the market. The stock market is so unpredictable. One day it's down to the lowest low in years, and then the next day it's back up. Who can trust it? The banks in Canada are pulling some of their most popular mortgage and financing programs because they aren't lending as much money and don't need the creative programs anymore. The media is full of bad news stories... housing sales are down, foreclosures are up, there is no money and we are doomed! It is very hard to ignore. But, you should ignore it.

Remember, real estate investing is all about finding a good deal. You can find good deals in any market, but it is actually easier to find good deals when nobody else is looking. And right about now...nobody else is looking! Take a moment to get clear on what you want to achieve, then get out there and find good properties that meet your objectives. You will be glad that you did.

About 7 years ago my wife and I started our real estate investing partnership. Our first purchase together was a duplex in foreclosure. The building was only 11 years old at the time and had potential for great cash flow (it was near schools, transportation, a lake and shopping and services which would make it an attractive place for renters). The market where we bought had crashed and this property had been listed for sale on and off for over 15 months. The price had dropped from $199,000 to $179,000 to $169,000 and then went into foreclosure.

We ended up getting the property for $159,000 and within 12 months, had a nice positive cashflow of $300 per month. Since then, the rental rates have almost doubled, and while the value has more than doubled, it's always been about the cash-flow. We timed the market well, but we weren't sophisticated enough to do that on purpose. Our goal was to get a solid property that would generate money each month. If it had gone down in value, it would not really matter because we would still be collecting the rent and paying down the mortgage with the rent.

It has been one of the best purchases we've made and we are grateful we have it. Our objectives in real estate investing have changed a bit since then, but we are still looking for good deals. While we look for strong market indicators (future job growth, stable government, population growth, investments in transportation), we don't look to buy into a market. We look to get into a deal. Stay true to your objectives and search for the deal, don't try to time the market.

Are you sitting on the sidelines doing nothing right now? Remember...the worst thing you can do is nothing, so ignore the fear and the loathing and take action on your objectives.