Sound Advice for a Weary Economy

light-bulb.jpgThe stock market goes down 700 points in one day. The stock market surges up 1,000 points in one day. A number of world leaders have gotten together and decided to inject liquidity onto the worldwide banking system in hopes of avoiding a depression and keeping the recession short and shallow. Inflation? Deflation? Everything is still on the table, and the coin is still tumbling relentlessly in the air.

Governments, ours included, are now poised to loan banks “as much as they need” to stay solvent. This is beneficial because banks loan out customers’ money and if all the customers come in at once and ask for their money back, then there is a big problem. It was called a “Bank Run” in the late 20’s and early 30’s, and it shut down a lot of banks because they didn’t have the liquidity (real cash in the till) to cover all the withdrawals.

That’s not likely to happen today because we have the FDIC insuring the deposits up to $250,000. But some of the loans these institutions made are just not worth what is owed on them. If the bank loaned out, say, $1,000,000 in mortgages, and the housing values on those mortgages have fallen to $600,000 then where is the other $400,000 going to come from? Even if they could put all those properties on the MLS and sell them in the twinkling of an eye, they are still short $400,000.

So what’s an investor to do during these turbulent times? Staying positive and remaining focused is a good start, but that doesn’t put the bread on the table. What will help the real estate investor right now is adaptability. Get out of your comfort zone and start operating in more than just one niche of real estate investing. Sure, you stick with what you feel most comfortable doing, but you must add more tools to your tool belt.

Think of yourself as an a la carte menu. A la carte means plenty of options to offer. If you have been a wholesaler and find that business has slowed down, what else can you do that would add to revenue? Can you partner with someone, could you take some properties as a landlord and hold them in an investment portfolio for a few years, can you help someone else find properties as a birddog?

How can you use the connections you have to solidify your base and expand your ability to make money? Is there studying you can do or are there parts of your investment operation that can benefit from deeper understanding? Study. Read. Think. You have a brain, it works. You would not have gotten this far if you were not capable. Get back to the basics. Work to build a stronger foundation.

Now is also an excellent time to expand your network. Talk to the people who are doing the same thing you, talk to the people who would normally be your clients or buyers. Talk to vendors and service providers. Use this time to strengthen your network so that you have the responsiveness, resources and agility to move and move more quickly in today’s market.

Opportunity does knock, but sometimes it knocks softly. Don’t get caught sitting at the kitchen table with your head in your hands thinking about how bad it all is. Stay responsive, be prepared, add more buying and selling techniques to your arsenal, and you will prosper.

Until next time, happy (and profitable) investing!

Doug Smith

P.S. There is less competition in today’s real estate market than ever before. Active investors from across the nation are reporting to me that motivated sellers aren’t taking offers from four or five different investors like they did back in the early 2000s. Instead, sellers often call just one investor and receive just one offer. It’s your job to make sure that offer is made by YOU. Get access to the insider’s list of bargain-priced properties and begin making offers today by starting your free trial at And when you do, I’ll give you access to over $1,253 in free bonuses that show you how to prosper in today’s market. See you there!

Posted on Oct 15, 2008

Author: Doug Smith

MyHouseDeals was founded in April of 2005 and has since provided information on thousands of bargain-priced properties with over $7 Billion in equity (and growing!) In addition to property lists, we help investors succeed by providing valuable tools, resources and education. Most of the properties on MyHouseDeals are single-family houses. Many of these properties are wholesale deals, which are for sale by other investors. Others are motivated seller leads, which are for sale by homeowners who are often in a bad situation. These properties are typically discounted by far greater amounts than bank foreclosures.

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