Augie

Looking for appreciation in real estate value is important, but only important to the extent that your investment strategy relies on it. In this market, speculative investing is a very dangerous game. Buying low is always a good practice. Adding value through renovation and rehabilitation can also create equity and profits. While trends may be indicative of future results, many unanticipated events can befoul virtually any analysis. Who could have predicted the current economic crises when there were so many contributing factors. You have to be careful not to speculate on house values when evaluating these trends.

The home value is important for those who wish to flip a house or only want to hold on to it for a very short period of time. If, however, your exit strategy is to buy and hold, the initial value is far less important, so long as you can cash flow the property. My parents bought a new home many years ago for $10,000 and 15 years later it was worth 10 times what they paid for it. In 1989 I purchased a home in a great neighborhood and was lucky to sell it 7 years later for my original purchase price.

I can tell you with confidence that I’d buy your house right now for whatever you think it’s worth, plus 1 million dollars. The question then is: what are the terms? What are the local rents in your area for a home like yours? Can I pay you $100 a month until paid? That may be a great deal, regardless of actual value.

This is why an investor needs to know multiple techniques for creating wealth through real estate. It affords you the greatest flexibility for financing and engineering deals that work.

The best thing to do when first getting started is to find a mentor. This is why joining your local Real Estate Investor’s group is important. Get to know as many people as you can. You’ll find out who the bad apples are soon enough and also identify your best contacts and mentors.