Long term real estate investing is the way to go.

In opposition to my last post when I mentioned there are some great opportunities for high end home flips in the upper end Scottsdale/Phoenix Metro real estate market if you do your homework and know your market. The middle to lower end market investor will need a different strategy.

While there are still some good fix and flips out there that can turn a profit, those types of opportunities are not for the novice investor. When you purchase a fix and flip the operative word is FIX. You have to have experience in the fix part and this is where many people loose big time.

Now for the novice who wants to take advantage of the Phoenix real estate market without the fix part, here it goes. There are literally thousands of homes in foreclosure and short sale in the Phoenix area and more coming available every day. The key to making money in this market is to buy and hold. You will need to purchase the right property and hold it for two to four years depending on when, where and what you buy. What makes it possible to hold for such a long period of time is the current condition of the rental market and the increased demand for rental homes as opposed to apartments. Many of the families who have lost their homes to foreclosure are still desiring to live in a house so rental homes are in demand. The good thing is even though homes have decreased in value from as much as 30 to 50 percent, the rental market has only dipped around ten percent and that sometimes fluctuates up to no dip at all. Because of these two conditions it is a perfect time to purchase a foreclosure or short sale and be able to rent it for as much, or in many cases, more than the new mortgage payment.

This creates a perfect opportunity for the person who is five to ten years out from retirement. I can foresee a possibility for great gains over these periods of time with little effort. If the real estate is purchased in the right areas and for the right price and considering your only investment would be the down payment, I believe you can expect gains of 100% over a five year period. Gone are the days when you could get these gains in less than a year which is exactly what many did before the real estate bubble burst in late 2006, early 2007.

The market is poised for good old fashion real estate investing done right. All of the lemmings that followed the pack and ran up the price of real estate to the point of bust are out of the game, and with the new restrictions on lending, it will be a very long time before that will be allowed to happen again. Oh yes, it will happen again. I give it 15 or so years, amnesia will set in and the greed will once again take over.

If real estate investing has ever been of interest to you, but you were worried about loosing, now is the best time to take that risk. The market could dip lower, but if it does and there is no certainty that it will, it won't dip much lower than it is right now. The potential for increase is tremendous. Two indicators give me a bit of confidence in that statement.

1) Homes in many areas are priced as low as they were ten years ago.

2) You literally can't build a new home for the price of buying an existing home that is only a few years old.

Historically, when home values dip lower than the cost of construction, the effect on the economy takes a much larger hit than just a down real estate market. It is at this point that the Government has to step in and make things happen, which by the way is exactly what is happening right now. The $8000 tax credit has increased sales across the country and I believe this has helped to stabilize home values and in many areas they have come up slightly. The good thing is there is a strong feeling that the tax credit will be extended and possibly expanded for 6 to 9 months.

If you're in the Phoenix area and would like to contact me for more information on this market, fill in the information form to the right and I would be happy to assist you.

Thanks for reading.

Type at you later.

Ken Cuellar