Following the herd

It's the conversation we all had as kids, and a conversation you may have had with your own kids or grandchildren:

Kid:  "Mom can I do (something dangerous)"

Mom:  "No you can't that's dangerous"

Kid:  "but Billy's mom let him"

Mom:  "Well if billy we're to jump off of a cliff would you?"

Kid:  "insert the inevitable groan of not getting your way"

I think there are a few things we can learn today, as adults from this scenario.  It seems that many of us are stuck in the logic we used as kids, and we are in fact "following Billy right off the cliff".  In my limited years of age (28 if you must know) I have noticed two markets go on the downward spiral and the fear that ensued.  The stock market and now the real estate market.  The common denominator, of people losing money, in both of these market declines has been people getting nervous and selling.  Markets fluctuate, they go up, they go down, and they stabilize.  Real estate will bounce back, and who will you be when it does?  The person that says "I will never invest in real estate again, I lost so much money", or the person that held onto the properties they had and/or bought on the decline and can say "I have made so much money in real estate you would be crazy not to invest"?  I personally want to be the latter, how about you?  I think the key thing to remember is Long Term Investment.

Here is a common conversation I have with investors & potential investors:

Investor:  "What advice can you give me for investing in real estate"

Me:  "Invest for the long term"

Investor:  "Well I am with my current house, but I want to fix and flip properties"

Me:  "That's fine, but plan for the long term.  As long as you do that, if you reach a snag and can't fix and flip the property you have a contingency plan and can make good decisions that will make you money rather than lose it."

Just because you are planning for the long term doesn't mean you need to keep it for the long term if the opportunity is right.  It just enables you to make the right decision instead of the drastic ones.

People are funny, they may not even think of selling their house, but once their neighbors all start to sell they get to thinking they are missing something.

In my state (Utah) there are so many builders that foresaw the coming crunch and instead of slowing down and building houses that were presold they started building everything on spec.  You wouldn't believe the number of new houses currently on the market.  These builders are now in trouble.  What would have happened if they stopped building, diversified their business into other types of build jobs and sat on the vacant land until it sold?  Now they are sitting on a vacant house paying construction loan interest.

The key thing, I believe, is to step away from the herd, and make some practical decisions.

Bryan Maynes - Realtor

Dwellings Real Estate

801.631.7530 - Phone

maybry@wfrmls.com - Email