Once again the stock market has recently taking a beating. Investors are fleeing and the usual suspects are declaring that “the sky is falling.” Not only that, I’ve heard from numerous investor friends asking me if they should hold off on investing in real estate for a while and what they should do with the rest of their properties.
Quite frankly, it’s scary how easily people get spooked and how quickly they join the masses in psychological hysteria. I hope you’re not one of them, but if you are, I’m going to tell you the same thing that I told my close friends.
First off, turn off the TV and ignore the media. Secondly, don’t worry about it. Everything is cyclical and this is just another blip on the radar. If you truly know how to invest in real estate, the economy and the events of the world don’t really matter. Fortunes are made in every market and we’re always going to have problems and there’s always going to be someone declaring that the end is near.
However, if you know how to run your numbers…
And you adjust them according to the current market conditions, then you can easily make a six-figure income in any market you want. For instance, when the market was hot a few years ago you could wholesale deals at 80% of value and rehabbers would buy them all day long. Now, you’re lucky to wholesale a deal for anything more than 65%.
But what about your rental properties and their plummeting values? Obviously, nobody likes to lose equity in a house. But if you purchased the property correctly, meaning you have solid cash flow of at least $200 a month then you can weather the storm. After all, you’re going to make that extra $200 a month whether your house is worth $190,000 or $160,000.
Perhaps the best part of these market corrections…
Is that it gets rid of the “weak” and only the strong survive. If you attended a REIA meeting back in 2005 you were likely sitting in a packed house. However, that same REIA meeting in 2009 was likely to be half empty. In fact, I recently found out that one of my favorite REIA’s in my area had actually gone out of business.
This is all good news for serious investors like you and me because there’s less competition and people’s mailboxes aren’t flooded with hundreds of postcards from different investors.
So… if you’re a little frightened right now… or if your spouse is badgering you to give up your dreams because of the unstable economy… then ignore it all, hang in there, and you’ll be handsomely rewarded if you keep diligently plugging along.