We’re Not Bad Guys After All…

Investors often take a serious beating in terms of reputation- not unlike attorneys and car salesmen.  People like to point the finger at us and accuse us of being greedy and opportunistic.  (I say a small amount of hunger and a dose of opportunity can go a very long way so I’m not sure I consider those labels a bad thing).

There’s nothing wrong with wanting to make money.  Hell, there’s nothing wrong with wanting to make a ton of money.  But there are lessons to be learned by the meltdown we’ve been witnessing on the financial front and within the real estate market.  It reminds me of a warning that a fellow investor would share with the audiences he addressed, he would say “pigs get fat, hogs get slaughtered.”.  Just take a look at the level of destruction resulting from the insatiable level of greed displayed by Bernie Madoff.

So what is the lesson we should learn by the real estate collapse we’ve been witness to the past few years?  Perhaps what we should take note of is that in order to be successful we don’t need to constantly strive for that home-run real estate investment.  If we focus on sound research and decent returns, we can make a great living, one small deal at a time.

And the truth of the matter is that investors just might be the real bailout mechanism that the real market desperately needs to regain REAL momentum and solid footing.  None of the “band-aid” solutions the government has put together will truly help to turn this market around, in fact, they may simply prolong or worsen the problems.  Investors can and will rejuvenate the real estate market by, in part, moving inventory again.  Ask anyone homeowner who lives next to a vacant foreclosure property if they’d rather wait for the government (or the banks) to solve the escalating foreclosure epidemic or if they’d be happy for an investor to come along and either place a renter in the property OR flip the property to a prospective homeowner.   I don’t think the government or the banks are going to get the vote of confidence on that one.

According to a recent article in the Wall Street Journal, it appears that good ‘ole fashion flipping of properties “is back in fashion”.  (Wall Street Journal- December 09, 2009 | House Flipping Makes a Comeback ).  My point here is that it’s the investors who are out there helping to solve the foreclosure crisis by picking up homes at foreclosure auctions and generating some buzz back into the market.  We may have to do it one deal at a time, but we’re out there sparking a fire in the market again.  More times than not, investors are able to move the inventory much quicker than when the properties are left in the hands of the banks.  Idle inventory is helpful to no one!

While foreclosures continue to set records with all-time high filings, month after month, the opportunities abound.  So the next time you see someone moving into a previously vacant foreclosure property, you can stop and wonder if an investor was behind the sale (or rental).  Conditions will continue to favor the investor in a market like this one.  And it’s nice to know, from that perspective, we’re not bad guys after all.