| Published statistics from the National Association of | | | | the property relevant to resale value, rental income, |
| Realtors suggests the upper Midwest, namely Detroit, | | | | and maintenance or repair costs. Bankrate also |
| Cleveland, and Indianapolis, have seen property | | | | suggests one of the surest routes to failure in the |
| values drop by 3-7% during 2006. | | | | real estate business is entering the game with a |
| This is a perfect example of how location is the key | | | | "get-rich-quick" mentality. |
| determinant of real estate values. While the entire | | | | Real estate is a slow business. It lacks the liquidity of |
| nation is in somewhat of a slump relative to real | | | | the stock market and prominent data regarding |
| estate valuations, the industrialized areas of the | | | | national averages is generally useless to local markets. |
| Midwest continue to lead the nation in property value | | | | With that in mind, investors must become masters of |
| losses. In contrast, the Pacific Northwest, which | | | | their local market, and invest with a long-term |
| includes cities like Salem, Oregon and Spokane, | | | | outlook. The next year may hold a lot of promise for |
| Washington have seen property valuations increase | | | | buyers as foreclosures and interest rate fluctuations |
| nearly 20% during 2006. Again, location is key. | | | | shake up the market. However, to avoid becoming a |
| Despite the apparent doom and gloom of the | | | | victim of sales slumps and potentially exorbitant |
| market, real estate investors continue to flock to | | | | mortgage fees, investors are well advised to enter |
| income producing properties as an investment vehicle. | | | | the fray with cash reserves sufficient to see them |
| But the old adage, "let the buyer beware" is as true | | | | through a six to nine month holding period. |
| today as ever. Industry analysts suggest individual | | | | Real estate investing is not for the faint of heart. |
| investors can still make their fortune in the real | | | | However, for those willing to study the market and |
| estate market, but they must be aware of market | | | | refuse to become over extended with other people's |
| niches, the use of financial leverage, and the growth | | | | problems (white elephants), the real estate market |
| potential of their local markets. also warns buyers to | | | | continues to hold enormous advantages to the |
| conduct due diligence prior to making a commitment | | | | investor. On a final note, remember: inspect a ton of |
| to a specific property. Due diligence implies the buyer | | | | properties, make a handful of offers, and purchase |
| has thoroughly researched local market values, | | | | one or two that meet all of your criteria for price, |
| conducted comparative property analyses, obtained | | | | financing, cash flow, appreciation potential, location, |
| professional appraisals, and considered their use of | | | | and resale value. |