As 2009 comes to a close it's only natural for short sale investors to begin looking forward to 2010. Here to help get the New Year off to a great start are the top fine tuning tips for short sale investors. 1. Chasing Appreciation. Real estate has always been associated with long term appreciation but in today's current economic climate, cash flow is king. Don't purchase a property expecting it to generate rapid price increases within the immediate future. Instead, make sure the property is able to produce a positive cash flow from the start to remain in the red.
2. Hindsight Hindrance. By its very nature, short sale investing is dependent upon future performance. It's tough to get ahead when you constantly are looking in the past. Whether you sold too early or held too long - or failed to purchase a property entirely - stop spending time on the past and begin to set your sights on the future. Everyone makes mistakes when it comes to investing; the key is to recognize why and reduce the risk of making the same mistake in the future. When it comes to short sales, don't be impressed or misled by what a property has sold for in the past; focus exclusively on what it is able to generate in the present and future.
3. Buy & Hold Forever. While this is certainly a viable strategy that has led to long term wealth creation for many investors, it's not the only game in town. Don't automatically dismiss the profit potential of turning a few fast flips as a valid method of rebuilding a sagging portfolio or simply adding a few extra figures to a savings account. Likewise, if the key buying factors on a property change, don't be afraid to sell rather than blindly continue to hold. Common situations that have a dramatic impact on the profit of a property include the loss of depreciation, change of neighborhood desirability or high maintenance costs.
4. Focus on Buying More than Building a Portfolio. Keep your investment goals clear. Buying real estate is fun so it's no surprise that the chase can easily overshadow the actual desirability of any given property. Have a firm strategy in place then follow-up routinely to assure you have achieved desired investment objectives. Once your strategy is clearly defined - stick to it rather than letting emotions rule the day. Remember, investors tend to overestimate the importance of current events rather than weighing them against the fundamentals. While current events are certainly important - invest with your intellect rather than emotion.
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"Disclosure: We are a Compensated Affiliate of HSA"
See you at the top!
Martin Crawford
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