Best Investment: Real Estate - Part 1

Today there is nothing better as an investment than real estate. In this down economic cycle real estate has been the first sector of the economy to suffer. The downward spiral started in mid summer 2007. We are in mid fall 2008 while most other sectors of the economy are being hit hard by bad results, there are signs that while not yet at the bottom the fall is slowing. In my previous post The Death Spiral, I outlined two cycles and the bottom. I believe that we are in the second cycle at this time.

There are signs that investors are grabbing properties for dirt all over the country. In late summer, investors who how to recognize a bargain whey they see them, started to acquire foreclosed properties in numerous markets. In September home sales have started to increase see the following article from the AP “September existing home sales up 5.5 percent”. Most the increase is due to two primary factors, a number of buyers on the fence are making moves and investors are buying foreclosed properties. In addition, banks are becoming more proficient at selling their foreclosures.

Properties that are now being bought for 25 cents to 35 cents on the current dollar are not going to go down much more. These markets are starting to see a bottoming out of property values. These are the market first touched by the foreclosure wave. Investors who know to identify the right properties and market have started to acquire them and rent them out. Once the market is stabilized and financing again available, properties will see significant increase in value.

For hard money lenders working with investors in these markets offer great opportunities. While there is still a risk for values to go down, we believe that this risk is limited and the upside more significant. This mean that the cash invested is more secure today.