Real Estate Investing Is Not Dead!

I know many of my readers are real estate investors, as am I, and here is a little encouragement for you... In May 2008 I attended a Robyn Thompson (aka The Queen of Rehab) four day “Real Estate Millionaire Mastermind Conference” in Altamonte Springs. The last speaker she had, to close out the event, was Frank McKinney. For those of you who don’t know, Frank McKinney is known as ‘The Real Estate Rock Czar’, because of his long blond hair, his crazy advertising antics, and the multi-million dollar spec homes he builds (he is currently working on his latest and greatest, which he plans to sell for approximately $130 million)! Frank is also heavily involved in building free housing for the homeless, especially in Haiti.

The only thing that Frank pitched when he spoke was a trip he is doing that includes touring his latest mansion, plus his personal mansion, plus some of the stuff he is doing in Haiti, with all proceeds from the trip going towards the Haiti projects. The talk he gave, in a nutshell, was his personal story, followed by his opinion of the current real estate market.

The best I can recall, here is what Frank said about the current real estate market. First and foremost, he said it is a great time for investors, because now is when we can buy at the bottom. Second, he said the number of investors has thinned out, so there is less competition. Third, he stated his personal opinion that the current real estate downturn will end this year, or next year at the latest, and here were some of his reasons... The average length of a recession is only ten months. He feels that the current downturn in the real estate market is enough of a correction in pricing, and possibly even an overcorrection (not completely sure I agree with that one). He stated 5-6 economic stimuli that have been put into place, and says that these will help jump start our economy, but it will just take them a little time to kick in… The stimulus I can remember are: the income tax break checks currently being sent out to Americans, interest rates being dropped back towards their lowest levels, the Federal Reserve proving their willingness to support banks and financial institutions, and the expansion of our money supply.

Now, I talk to a lot of people about real estate, and I have heard from many that they already feel the market is improving some. Plus, when someone with Frank McKinney’s credentials talks, with no ulterior motives, and says that he has studied our current economic and real estate climate extensively, and he feels that we will experience an upturn soon, that carries a lot of weight with me.

Now, Frank can’t guarantee he will be right, and I certainly can’t guarantee it, but a bottom does have to come some time, and wouldn’t you rather be buying at the bottom than tucking your head in the sand because the declining market chased you out of real estate? Personally, I am getting back into buying mode now, though I never really quit buying, and I plan on buying as we head towards the bottom, buying at the bottom, and buying as we come out of the bottom. I believe in real estate investing, and I plan on doing a lot more of it in the years to come. Now, to be fair, I don’t think we will see the kind of crazy appreciation again that we saw before the market turned (things definitely got overheated), but I still love the long term benefits of real estate, which I have preached on before. Done correctly, you get positive monthly cash flow after all expenses. If you do your homework, you can have significant equity on the day you buy. You should get equity build up as your underlying mortgages get paid down (basically, your tenants buy the properties for you). Long term, your properties will appreciate again. It is easy to apply leverage in real estate. And lastly, you get several tax advantages when compared with alternative investment choices. Taken together, these benefits make real estate an incredible investment option for those who know what they are doing.

Well, that is my pep talk for today. As always, use your common sense, and buyer beware; you are responsible for your own action and results. Also, I am not saying run out and buy all of the real estate you can get your hands on. However, I am saying that well thought out, well planned, long term buy and hold real estate investments that mesh with your lifestyle and personal goals can yield very nice results, as indicated by the fact that the majority of wealthy people in America either got that way, or stay that way, by keeping a lot of their wealth in real estate (and that isn’t just a coincidence!). Best wishes, and happy investing!