With the recent real estate market crash, a lot of mortgage companies, real estate agents, and brokers are now gone. Sure, some experienced investors have been hurt, and the toll the bubble will take on the economy is still unknown, but most investors who were savvy are not pulling out of the real estate investment market.
Just like in the stock market, there are different sectors of the real estate market that ebb and flow based upon a number of different factors—and investors pick and choose from these areas. Often the investor is selling stocks in one market to pick up rising stocks in another, whether the sector in question is technology, pharmaceuticals, or oil.
In real estate investing there are different sectors just like the stock market, and at certain times some are better than others—as I’m sure most of you know. And, everyone is rushing around trying to figure out where the jackpot is. Whether it's scooping up foreclosed properties or buying from very motivated sellers - as they lean towards foreclosure - in a crash there are a number of opportunities.
Ideally, one would like to find property that will increase in value no matter what the trends are in the market. And you can. The good investor will find property in areas that are on the rise that others might have missed—untapped areas. Now, with many home owners foreclosing, it’s good to own apartments, as these former home owners are looking to rent, and rental rates are going up as demand rises.
To Think About: Also, as an investor in real estate you have to figure out what skills set you apart. Are you a good networker and bring partners together? Are you in construction and adept at remodeling property? Are you a lawyer or accountant, good with the contracts and or the numbers? These are all pieces that you might need at one moment or another - but what is your role. Once you have your role clarified, you can then set out to find people who can fill these other roles, whether those are property managers or real estate agents that alert you to property.
Then, you might be an investor that focuses on a certain sector, perhaps single-family homes or maybe your expertise is in buying REOs. Here's a quick list of sectors or types of real estate investors focus on:
• College market – apartments for colleges or universities
• Commercial real estate
• Single-family homes
• Mulit-family homes
• Land prospectors
• Large commercial real estate – malls or large business complexes
• The plexes: Duplexes, Tri-plexes, and Four-plexes
• Apartment buildings
• Vacation homes
• Residential communities
• Local: In state versus out of state
• Pre-foreclosure and foreclosed homes
• Restoration – specialized in restoring old homes or property deemed a historical landmark
• Event buying – real estate for an upcoming event like the World Cup or the Olympics
• Residential hotels
• Real Estate Investment Trusts
• Office buildings
All of these sectors or different types of investors have their good points and bad. But these points depend more on the state of the market. The current market encourages you to purchase condos, apartments, or duplexes. As anyone in the stock market will tell you: it pays to have a broad range of stocks and not to have all of your money in one sector—in other words, diversify. But at the same time, as mentioned before, know what you're good at and the sector you have had success in - stick with that template or plan.
Read more...Diversification in Real Estate