“How
to make amazing profits buying real estate when everyone else is
selling”
Have you ever
bought stocks or mutual funds because stock market prices were going
up, up, up? What was the end result of purchasing those stock
shares? Most people are going to say that they lost money. I’ve ran
with the herd and lost money doing exactly the same thing.
Grrr!
Wrong, wrong,
wrong.
The best time
to buy an investment is when everyone else is selling that
investment, or better yet, when everyone else is desperate to sell,
but can’t.
This is called
“contrarian thinking, or
contrarian investing”.
Contrarian
investing can also be used when purchasing real estate for
investment purposes.
If you think
back to 2001, it seemed like every other St George home was for
sale. Foreclosures were rampant because people couldn’t sell their
homes for what they owed on them. Some areas seemed especially hard
hit including Bloomington and Bloomington
Hills.
But now… look at the real estate market. Homebuyers
are desperate to buy, causing prices rise up over 20%+ during
2004.
How much higher
would your net worth been if you had bought a couple of rental homes
in 2001? You could have
bought both homes for as little as $95,000. If you put them up
for sale now, you could get
at least $150,000 for each. Wow!
This is true
contrarian thinking.
Contrarian
investing can make you rich, if you can force yourself to go
against the crowd and buy when everyone else is
selling.
Real estate is
great for contrarian investing because unlike the stock market, it
“cycles” slowly.
Real estate
will be “hot” for several years and then cool off and “run cold” for
a few years before running hot again. Incredible deals can be found
in the down or “cold” markets.
A $226,000 Home
for 22% below Market Value…
During the last
down market, I sold a house in Winchester Hills to some homebuyers I
was working with. The
home had first sold in March 2000 for $226,000.
It went back on
the Market in August and didn’t sell. For some reason the sellers
got desperate and lowered the price drastically. My buyers bought
this home October 2000 at the new, reduced price of $175,000. 24
months later my buyers sold the home for $235,000! This was a profit of
$60,000 because my buyers bought in a down
market.
$17,000 Profit
in on a $3,400 Investment in only 2 1/2
years…
Another example
is a little condo that I purchased 2 years ago in that absolutely
awful St. George real estate market.
The owner had this
place for sale for at least 2 years. I was one of the listing agents
he hired to help him get the place sold.
After a while I
found a buyer who bought the place with seller financing. This buyer
immediately defaulted.
After getting the property back, the
owner rented it out, using me to manage it.
I had managed
the place for about six months, when I asked the owner if I could
buy his condo with seller financing. I offered him $45,000 (The
condo was listed previously for $50,000) He agreed to the seller
financing if I would put $5,000 down. I said all I could put down
was $500, but I would be willing to paint ($400), re-carpet ($800),
and catch up the homeowners dues that were $1700 in arrears. He
agreed to this proposal if I would pay him in full in no more than
five years (a five year balloon payment). We shook hands on
it.
After the closing, I did my fix-up, paid the homeowners
dues, and then rented the place out for a year before moving
in.
I refinanced 4 months ago to get rid of the balloon
payment (which had 3 years left to go). This little condo appraised
for $62,000 at that time. Not bad for 26 months ownership.
The only reason I did so well, was I was willing to buy in a
down market when everyone else was desperate to sell.
I have other
great stories I could tell. I have done contrarian investing, and
can strongly recommend buying against the
crowd.
Sincerely, Don
Glasgow
Copyrights Reserved.
February, 2005.
No copying or reproduction is allowed without
express consent of Don Glasgow (435) 619-3664
