To readers who have been with us for a while, this theme might sound familiar, but it bears repeating. Unless you intend to make losing money a new hobby, you CANNOT invest in real estate unless you understand the housing market. But before we can even talk about the housing market we should define the concept. Don’t be like the dunderheads in the mainstream media who parrot the phrase “housing market” when referring to the entire housing industry.
To refer to a national housing market is such a broad generalization as to be useless. They might as well be saying “Esohogin niggle fritzer.” It’s nonsensical. To think you can compare the buying and selling of houses in Orange County, California, to the same process in Fort Leonard Wood, Missouri, is ludicrous. About the only thing they have in common is that we’re talking about houses in each location.
There is no national housing market. This idea is so important to real estate investors that we’ll say it again. There is no national housing market. The proof of this can be seen clearly in recent years. While an unprecedented foreclosure crisis has evolved in the United States, and driven down house prices in many markets, there are a double handful of locations around the country which are doing quite well.
For example, Jason Hartman and his Creating Wealth team of property experts have had a “hands off” approach to investing in California for years now. The local economic situation is such that the numbers simply do not add up when it comes to finding a good real estate deal that provides positive cash flow right off the bat. Present factors in California housing make it too dicey for us.
So does our money sit on the sideline twiddling its thumbs? Hardly! We have more than three dozen local market areas around the country under surveillance. Just because California (or any other place) is in the crapper doesn’t mean we stop buying real estate. Switch your sights to Phoenix, Arizona, or Dallas, Texas, or Indianapolis, Indiana, and you’re looking at a bird of an entirely different color.
The bottom line is this. The United States is too large and diverse an area to be neatly categorized when it comes to anything, least of all real estate, so don’t make that mistake. Now that we’ve got you thinking straight about the big picture of the “housing market,” let’s talk about how to select a particular investment property from the market of your choice.
No Network is a Panacea
While Jason’s Platinum Properties Investor Network (PPIN) is a unique and brilliant tool, members of this free service shouldn’t be fooled into thinking they don’t have to do any work on their own. When it comes to buying an income property, don’t trust anyone’s opinion more than your own. It’s your money on the line and the final decision whether or not to buy a certain property is yours alone. Having said that, joining the PPIN can save a lot of time and trouble when it comes to narrowing down which area of the country you want to invest in, and more importantly, which particular property.
Jason’s network operates on the micro-targeting principle, which is a good concept to understand and use in any real estate deal. The idea is to work from a large snapshot of a particular geographic area, drilling down, peeling away the layers one at a time until you hone in on a likely piece of real estate to invest in. It’s not good enough to know that a particular neighborhood is a good bet. You’ve got to know which side of the street or which corner of the block is best.
If you think Jason spends his time trying to remain an expert in almost forty local markets around the country, you would be slightly mistaken. While it’s true that he probably knows as much as anyone about a variety of far flung geographic locations, it would be physically impossible for one person to have his or her finger near enough to the pulse of each and every market to do any good. It’s also a terribly inefficient use of time. But what if you procured the services of an accomplished property professional in each market and picked their brain about what constituted a “good deal” in their neck of the woods?
That’s exactly how the network works. Through a preferred arrangement, Jason retains the services of an Area Specialist in each market he’s interested in. These specialists select and recommend prime properties to Jason for distribution to the network. All you, as a savvy real estate investor, need to do is watch your in box for the next recommendation to arrive, right?
Sorry, it’s not quite that easy. While we stand firmly behind the idea that each and every property that finds its way onto our network list makes financial sense the day you sign on the dotted line, we always tell our clients to perform their own research.
So exactly does an investor go about performing their own research?
Take a Little Trip
In the first place, we never suggest you buy an investment property sight unseen. If you live in southern California and are researching a house in Austin, Texas, the truth is you can’t really accomplish the feat long distance. You’re going to have to get on an airplane or behind the steering wheel of a car and get your own feet on the ground of your target area. While the Area Specialist can talk your ears off extolling the pros and cons of a property, you need to get there and see it with your own eyes. You should want to do this. If you don’t, maybe real estate investing is not your thing because you can make a big financial mistake from long distance. Kenny Rushing, writing for REIClub.com, related a story from early in his career about why it is so important to study the market before buying.
“Early on in my real estate career I bought another property in south St. Petersburg, Florida. Everybody else but me knew most of the properties in the area were rental properties. Few if any homes were being bought. This area was not a sellers’ market, it was a renters market. Not studying the market or doing any research of any kind, I blindly bought the piece of property in south St. Petersburg. When I bought the property, my intentions were to rehab and quickly re-sell it. Because I did not study the market or do research of any kind to find out information about the area where I was buying the property, I was stuck trying to sell that house for nearly eighteen months. So much for a quick re-sell. There are areas in every city that are better markets for rental properties than they are markets to rehab and re-sell properties. Be aware that you are in the right market for whatever it is you are planning to do.”
This kind of costly investing mistake can be avoided by a little thing called research. Get to know it and then get to work creating your own pile of wealth in the housing market.