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The changing market

 

The real estate "boom" is over, experts say. With change comes both risk and opportunity.

Investing strategies in a changing market
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Struggling real estate investors present another opportunity in a market that's headed south. "I've sometimes made more money in a down market because that means people have to get out," says Weiss. With stock investments, one can simply hold in a down market. But properties are expensive. From needing a new boiler to sitting on vacant apartments with no rent coming in, "It's expensive to hold a piece of property if all the cards are not lined up right."

Sure about foreclosures
Sometimes there's no saving a falling house of cards. Worzala points out that many people who got themselves into risky mortgages, like ARMs and no-money-down deals, can no longer afford their property when interest rates rise. It doesn't take long for them to fall behind on payments and go into default.

"A lot of people are sitting on the sidelines right now, waiting for properties to come down to a reasonable level," she says.

McClain agrees. "Foreclosures are rising every day in some markets. We will hear a whole lot more about them, especially with the amount of people who came in with ARMs."

Investing in foreclosures takes a true understanding of the strategy and a stomach for risk, though.

"You can't get title insurance on them," says Reed, who calls those who push foreclosures in their real estate seminars "criminal con men." And, investors who attend foreclosure auctions must have the cash to complete the transaction in pocket.

Some experts suggest forgoing the auctions and waiting until the bank takes the property back, then making an offer directly to the bank.

Rules of real estate

Melissa Ezarik is a Connecticut-based freelance writer.

-- Posted: March 1, 2006
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