Real estate investing is like growing grapes for wine.  There is a microclimate effect on grapes. One vineyard produces merlot grapes that produce wine that sell for ten dollars a bottle and the one right next door produces wine that sell for $150 a bottle.  What’s the difference?  Location, location, location!  One gets better sun, better rainfall or has more nutrient rich soil.  These elements make for a better result.  Houses are similar, even in this turbulent market.  Right now it is very tough in some markets because of falling prices.  Florida, California, Nevada and Arizona, enjoyed rapid price appreciation while the rest of the country saw more moderate price growth over the past few years.  These areas are now being riddled with foreclosures and abandoned properties while other parts of the country are still selling homes.  Texas and North Carolina have areas which boast strong demand.  Tennessee is another state which is drawing in new population causing properties to sell.

The microclimate aspects of real estate is to know the areas where owner occupants want to live.  Places that, even in this kind of market, show pride of ownership.  Neighborhoods which attract owner occupants and families.  Easy access to shopping, good schools and low crime.  Isn’t that where you’d like to live?  This is a market where you must buy at either a deep discount or with excellent terms. In slow but desirable areas I prefer to buy and hold on until the market recovers while in more rental oriented areas I am looking for seller concessions in terms of deferred payments, discounted pricing or long term financing.  In either case, by buying right I can cash flow now and if I choose, I can seller finance my way out or help my tenants and buyers obtain conventional financing when the market recovers.  Best of all, I might not sell a single one, let them pay down and give me a nice monthly retirement income.  It’s great to have choices!

In any market you need to know the local fundamentals and plans for future development as well as which properties/areas are selling at any given time.  You must also have the knowledge to negotiate the right kinds of terms.  Terms that allow you to buy without conventional financing and to make the property easy to finance for your tenants, tenant buyers or buyers.  This way you are never at the mercy of bank financing.  In my upcoming “Knowledge” post, I will share my favorite technique for Managing in This Market.  While it works well in any market, it works particularly well when the residential real estate market is in turmoil…and friends…WE’RE IN TURMOIL!!

When you learn to understand sellers needs and find a way to create a deal using Intellectual Capital rather than cash or credit, you’re on your way to total control over your financial future!