Fact 1:

All real estate markets are local. You need to pay attention and study the signs in your own backyard rather than letting the national average scare you. In certain parts of the country, like the upper Midwest, you would be faced with the fact that you would kill or die for a 5% appreciation rate rather than the stagnant to declining appreciation they have experienced for the last few years. Or you could be in a hot market like Phoenix or Las Vegas which has seen appreciation skyrocket to 30% and in certain areas 40% annually. All of these areas make up the national average and neither has anything to do with the other.

Fact 2:

The Term “Bubble” paints a picture that the price of housing will burst at some point. “Bull Puckey!” Land is in limited supply throughout the United States. As such, it is subject to the same laws of supply and demand that the rest of the economy is: the lower the supply, the higher the demand, the greater the price. The cost of a house in the Seattle area where you have physical as well as government-imposed restrictions on growth will have higher house prices than somewhere in the middle of Kansas. The point is real estate will never be worth nothing. The house may fall down but the land will be worth something. Yes appreciation rates may fall, may even depreciate in a few areas, but it will always have value.

Fact 3:

The headlines tell the tale:

“House Values are only up Twice the Rate of Inflation this year as compared with Three Times the Rate of Inflation from Last Year”

The above headline just doesn’t have the pop that this one below does now does it?

“When Will the Housing Bubble Burst?”

Without that catchy headline they won’t sell as many papers nor will they get as many viewers now will they?

Fact 4:

When you are an investor you are not necessarily doing what the media terms as “Flips.” There are many ways to invest in real estate such as: private lending, REITS (real estate investment trusts), landlording, buying discounted notes, foreclosures, pre-foreclosures, seller-financing as well as what is commonly called “flips” or “Quick Turn Real Estate” as popularized by one well known Guru. This last tactic is what seems to be drawing the most attention. It has been popularized by many new TV shows such as “Property Ladder,” “Flip That House,” and my personal favorite “Flip This House.”

To many novices they look at these shows which glamorize the business and the renovations. They look at the profit as shown on these programs and say to themselves “Hey, if these idiots can do that, then so can I.” Well, for most of the episodes of the first two programs I would have to agree the investors were uneducated and down right lucky to be in a hot market. I can’t say I watched all of the episodes, but thank God for TIVO. What these programs all have in common is showing the renovation process. They show the perils and pitfalls pretty well, but trust me, the 30 or 60 minute episodes cannot show the negotiations nor the financial implications involved. And trust me, you can ask any active investor who does rehabs and they would all be thankful if it only lasted for 30 or 60 minutes. I know that my stomach would. Getting back to the point. There is much more to investing than just “Flipping” properties.

Fact 5:

As a creative investor we do not pay retail nor do we usually have all the costs associated on the retail side. You are dealing with motivated sellers rather than the typical “Want-to Sell” homeowners, those who sell through the conventional process. This fact is lost on some of the financial gurus and media pundits. If I had to guess I would have to say that creative investors only make up less than 10% of real estate investors in the United States. But I would have to say that a goodly portion of the remainder are very experienced and astute investors, who both have the money and experience to whether any changes in the market. They are going to invest in the market at the proper time and in the locations that warrant investment