Now would be a good time to talk about leverage. You know, that term that everyone has talked about for so long. It is easy to talk about leverage when everyone is doing well in the market. It is actually a joy to talk about how much leverage you have in the market and how well you have positioned yourself.
But we are just getting to the point where we are seeing a few people out there that understand what true leverage is and what the correct ratios are. For those few out there that have been through this sort of downturn in the market and actually learned from it, this is an awesome time to be a real estate investor.
Consider that if you knew where to look and what indicators to keep an eye out for, you could have seen this coming a mile away. For anyone who has a surplus of cash and is not hemorrhaging right now, it is a buyers market like nothing we have seen in 80 years. I have been saying that THIS is the real opportunity, not the past 8-10 years. This is going to go on for a while too, so don't fret. The key is to understand what your ratios are and to understand the meaning behind the numbers.
One of the worst things we can do as investors is to let the banks tell us what is acceptable and what is not acceptable. Dive into your numbers and look at the big picture, you can still be conservative and make a killing. Too many of us (yes, I have been caught up in it as well) were overly aggressive and we are lucky if we learn from our mistakes.
If we are smart, we can learn and grow our portfolios much larger than before the market toppled. The key is that we have to be disciplined enough to conduct our own debrief analysis to figure out where we went wrong and put personal investing policies in place that we actually adhere to. Discipline, discipline, discipline.
Then focus on gaining leverage. Because if this ever happens again, you will definitely want to be ready for it. Shame on all of us if we let this happen again and worse, if we are not leveraged properly!
Robert D. Cass
Showing posts with label Real Estate Investors. Show all posts
Showing posts with label Real Estate Investors. Show all posts
Wednesday, April 22, 2009
Wednesday, April 15, 2009
The Pendulum Swings both ways!
There are so many wild things going on in real estate and mortgages right now, that you have to expect some overreactions on all sides of the business. Specifically, last September Fannie Mae's guidelines limited investors to purchasing 4 properties. Ouch! This put a crunch on many would-be investors.
At the time it looked like an over reaction, but in hindsight, it did have some positive effects. Over the past decade, there were many "investors" who had no business being in the business of real estate investing. Now, they were not the only problem, but the system encouraged them to purchase 10 properties and the vast majority of those folks were completely over-leveraged and not prepared to handle a down turn in the market.
While I completely disagreed with the decision last fall to cut back to 4 properties per investor, it did serve to stem the tidal wave of investors who were getting into the market and were ill prepared for the worst. Granted, by that time, the damage had already been done, but at least the effort was made to correct one aspect of the problem. I think that, by and large, it worked to keep the people out who should not have been investing.
Here is the funny part though...the people who are true investors know how to move money around and purchase properties REGARDLESS of what Fannie Mae is up to. Those relatively few have been largely unaffected because they understand how to buy correctly and more importantly, know what ratios they should stay under to keep from being over-leveraged. If we the bankers tell us what we can and can't do, we will be in a pretty precarious place. Thank God there are those investors who know where to get the money to move properties.
You see, it's a very bad thing when deal flow stops, so we all need investors to keep deals going when the market slows down. There is legislation being considered in every state that threatens the rights of investors and that is a very dangerous thing. While we are in this down market, we need investors like never before because, by and large, they are the only ones making a consistent difference. I know there will be someone who will tell my how untrue that is, but I don't care...whether I am right or wrong is not important, the fact remains that real estate investors are a very, very necessary part of our financial eco-system. Take them away and bad things happen.
The herd of Investors has been thinned out to a reasonable degree. Now we need to get back to basics and build a nation of educated investors...and by that I am not talking about an education by Carleton Sheets. I am talking about sound business plans with reasonable exits and a deep understanding of leveraging principles.
Healthy Investing!
Rob
http://www.LocalRealEstateDeals.com
At the time it looked like an over reaction, but in hindsight, it did have some positive effects. Over the past decade, there were many "investors" who had no business being in the business of real estate investing. Now, they were not the only problem, but the system encouraged them to purchase 10 properties and the vast majority of those folks were completely over-leveraged and not prepared to handle a down turn in the market.
While I completely disagreed with the decision last fall to cut back to 4 properties per investor, it did serve to stem the tidal wave of investors who were getting into the market and were ill prepared for the worst. Granted, by that time, the damage had already been done, but at least the effort was made to correct one aspect of the problem. I think that, by and large, it worked to keep the people out who should not have been investing.
Here is the funny part though...the people who are true investors know how to move money around and purchase properties REGARDLESS of what Fannie Mae is up to. Those relatively few have been largely unaffected because they understand how to buy correctly and more importantly, know what ratios they should stay under to keep from being over-leveraged. If we the bankers tell us what we can and can't do, we will be in a pretty precarious place. Thank God there are those investors who know where to get the money to move properties.
You see, it's a very bad thing when deal flow stops, so we all need investors to keep deals going when the market slows down. There is legislation being considered in every state that threatens the rights of investors and that is a very dangerous thing. While we are in this down market, we need investors like never before because, by and large, they are the only ones making a consistent difference. I know there will be someone who will tell my how untrue that is, but I don't care...whether I am right or wrong is not important, the fact remains that real estate investors are a very, very necessary part of our financial eco-system. Take them away and bad things happen.
The herd of Investors has been thinned out to a reasonable degree. Now we need to get back to basics and build a nation of educated investors...and by that I am not talking about an education by Carleton Sheets. I am talking about sound business plans with reasonable exits and a deep understanding of leveraging principles.
Healthy Investing!
Rob
http://www.LocalRealEstateDeals.com
Wednesday, March 18, 2009
Welcome to Local Real Estate Deals Media
Magazines aren't what they used to be...at least not the new ones. While magazines will probably never go away entirely, they are losing their grip on the market and readers. The truth is that ideas are omni-present, so media outlets need to keep the pace.
Local Real Estate Deals media is working to address the issues that real estate investors face every day. Let's be clear about a few things...we are not the experts of all things real estate. In fact, I take pride in the fact that I am a student of the industry. You see, every time you refer to yourself as a GURU, there is someone who just can't wait to knock you off your post. The reality is that there is so much to know about real estate is is tough, if not impossible, to be an expert at all things. So, to be clear, I am a student of the industry and jump at the opportunity to learn something new.
I love the fact that we interact with our subscribers and our advertisers for that matter. Our content is alive and well and generated by anyone and everyone who as a passion for real estate. I would like to think that we all want to help others succeed, but that is not always the case. In any case, if you have ideas, thoughts or any kind of content that relates to the real estate investor population, then we have the media for you, whether it is our dot com, dot tv, magazine, blog or youtube....we want to hear from you.
We like to think of ourselves as the National Forum for Local Investors, in fact, that is our tag line. We have an online magazine at the following link http://viewer.zmags.com/publication/54d27127#/54d27127/1
as well as a deal listing engine that you can find at www.LocalRealEstateDeals.com
and a "Dot TV" site that is on the way as well...that will be located at www.LocalRealEstateDeals.tv
In addition to this blog, we have a presence on YouTube...yep, you guessed it...our user name is LocalRealEstateDeals...we like to keep it consistent.
Well, thank you for your interest, we look forward to hearing from you.
Respectfully,
Robert D. Cass
http://www.LocalRealEstateDeals.com
Local Real Estate Deals media is working to address the issues that real estate investors face every day. Let's be clear about a few things...we are not the experts of all things real estate. In fact, I take pride in the fact that I am a student of the industry. You see, every time you refer to yourself as a GURU, there is someone who just can't wait to knock you off your post. The reality is that there is so much to know about real estate is is tough, if not impossible, to be an expert at all things. So, to be clear, I am a student of the industry and jump at the opportunity to learn something new.
I love the fact that we interact with our subscribers and our advertisers for that matter. Our content is alive and well and generated by anyone and everyone who as a passion for real estate. I would like to think that we all want to help others succeed, but that is not always the case. In any case, if you have ideas, thoughts or any kind of content that relates to the real estate investor population, then we have the media for you, whether it is our dot com, dot tv, magazine, blog or youtube....we want to hear from you.
We like to think of ourselves as the National Forum for Local Investors, in fact, that is our tag line. We have an online magazine at the following link http://viewer.zmags.com/publication/54d27127#/54d27127/1
as well as a deal listing engine that you can find at www.LocalRealEstateDeals.com
and a "Dot TV" site that is on the way as well...that will be located at www.LocalRealEstateDeals.tv
In addition to this blog, we have a presence on YouTube...yep, you guessed it...our user name is LocalRealEstateDeals...we like to keep it consistent.
Well, thank you for your interest, we look forward to hearing from you.
Respectfully,
Robert D. Cass
http://www.LocalRealEstateDeals.com
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