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How You Can Make Money In A Down Market

Aug 6, 2008
The residential real estate market has reached an all time low when it comes to homes that are for sale, foreclosures and the lack of qualified buyers. Attempts to jump start the market again by lowering the interest rates have not proven to be successful. Is this the end of the real estate investment boom? Absolutely not! As a matter of fact, this is the beginning of even a bigger boom. You can make money in today's market just as you could when the market was burgeoning. As a matter of fact, it is easier as there is less competition.

While many amateur real estate investors gave up when the residential market crashed, those who really knew the game realized that this spelled opportunity for them to make even more money. Foreclosures are at an all time high - so what does that mean to the investor? It means that there are more foreclosures on the market than there are buyers. When equated with the laws of supply and demand, it can only mean that the prices of the foreclosures are dropping even lower than ever.

Banks today do not want a foreclosure on their books. They can't get rid of them. Years ago, you only saw foreclosures in bighted areas. Today, you will see foreclosures in just about every neighborhood. Many people bit off more than they could chew when the market was booming. Many people borrowed against the equity of their home and realized that they were paying more than what the house was worth. Many people signed up for adjustable rate mortgages that they could not afford. And many people simply lost their jobs due to a recession that many refuse to acknowledge that we are in.

Because of the abundance in foreclosures, banks do not want these properties on their books as they know they are bound to lose even more money. For this reason, a savvy investor can make a deal with a bank to buy a home that is headed for foreclosure before it enters the court system and costs the bank tens of thousands of dollars in legal fees.

One way to do this is through the short sale. In this type of investment, the investor works with the owner of the property who is just trying to get out of the deal without it costing him any more money, and with the bank to purchase a piece of property before it costs the bank money in the foreclosure. Because banks know that it will not only cost them tens of thousands of dollars in legal fees, but time that they house sits (it takes at least 6 months for a foreclosure to go through the court system and then the bank has to try to sell the house), they are wiling to sell the house for a lot less than the market value and what is currently owed on the property. This makes the bank happy as they have gotten rid of the house without foreclosing and the former owner happy as they can walk away from the deal without any backlash.

The short sale is one way you can make money in today's down market. To learn more, take a real estate investment course. There are plenty of opportunities out there for savvy investors.
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