tap tap tap... hello? ... hello? ... is this thing on?

"OK, ah, everybody, we'd like to announce that the next real estate boom will begin this month"


Go forward about 15 years and look back.

When the history of this period in real estate is written, when all the players are interviewed and the numbers are counted, we will see that the most interesting part of the story will be the period we are about to enter:

The upside.

We have seen the rise of the industry (roughly the years 2001 to 2005). And now the fall (2006 to 2008). Now, I think, we are about to enter the third period – the recovery (2009-2011).
           
What’s going to be most interesting about this history will be the part about who made money, who didn’t and when most of that money was made.

(Let me take a moment to review four years of college economics: Buy low – sell high.)

My suspicion is that some of the great fortunes in America are about to be made as we emerge from this disastrous market.

If you recall, when the real estate boom started in 2002, nobody announced it. Nobody took out a bullhorn and thundered, “Everybody who wants to make money line up here on the left.”

In fact, I dare say nobody “announced” the real estate boom until the end of 2004 and the beginning of 2005 – when it was nearing its crest. That’s when the financial pundits really caught on to what was happening.

It’s when you started hearing cab drivers talk about how many homes they bought and how much leverage they had.

When all is said and done, when the history is written, it will be determined that all those cab drivers – the amateurs who went into real estate investing too late – got burned.

The people who made money on the rise, it will be seen, were professional investors who knew what they were doing, who studied markets and armed themselves with the relevant data, and began their buying late in 2000 or even before.

Back to today.

I believe the professional real estate investors are still out there and have resumed their buying activity.

While the financial pundits and Wall Street analysts are laser focused on home prices, we have quietly seen monthly home sales stabilize. Foreclosed homes are being bought – by some people – for pennies on the dollar. Those are the homes that are going to be resold 18 months from now for 50 percent more than what they cost.

I think now is a good time for real estate professionals to educate themselves. The people who make money in the future are going to be those who study the numbers and know the markets in their own backyards.

You always build in your profit up front. This is the low side of the market. Consider this an announcement.

Frank Cook
Publisher

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