Investing in Real Estate is Not a Fantasy

It’s a great time to buy real estate as an investment. There, I said it. Now bring on the naysayers who want to yell at me, I can take it. I’ll stand by being the agent who said ‘it’s a great time’ because prices are low, loans are cheap, Seattle rents are high and renters are easy to find.

Now I am not saying that prices may not go down more… but I didn’t say it was a great time for speculation, did I? From Wikipedia: “Speculation is the practice of engaging in risky financial transactions in an attempt to profit from short or medium term fluctuations in the market value of (real estate)…rather than attempting to profit from the underlying financial attributes…such as capital gains, interest, or dividends. Many speculators pay little attention to the fundamental value of (real estate) and instead focus purely on price movements.”

Real estate speculation is part of the reason we are in this economic mess in the first place. From 2004 to 2007 there were people all over America buying real estate as an ‘investment’ with just the simple plan of ‘sell it in a year or two and make a boatload of money!’ That is all fine and dandy if you GOT LUCKY and sold your property before everything crashed. I know, I buy lotto tickets too sometimes. How I will spend my millions is a really good fantasy to lull the brain to sleep during my insomniac evenings. Think six years back when real estate was in it’s glory days. Seattle condominiums were having pre-sales and there were people lined up to buy one or several units with no intention of ever living there, some with no intention of finding tenants for the units. These same condos are now coming on as short sales and bank owned properties. It was a fantasy that these properties would increase in value so much over short term that the owners could walk away with thousands for doing practically nothing. Most of these people are now broke, and what is worse the ‘normal’ people who bought in these buildings are facing even lower property values due to their ‘distressed’ neighbors.  Ok, enough on that subject… we can not fix the past but we can certainly not make the same mistakes in the future.

The reality of real estate investment is that we have to do some math. It’s not trigonometry, it is simple calculations for the return you are going to get for the money that you put into the investment. You are likely looking for cash flow but not necessarily. The type of loan, the type of home and location, the condition of the home… these are all factors when considering if a property is a good investment, please do your homework and consult with a professional. I would love to turn your real estate investment fantasy into reality!