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Advanced Investing

Real Estate Cycles

During the last several years, we have seen real estate markets dramatically fall but then take an about-face with exceptional speed.  Other markets have returned to pre-2008 levels while some are still in recovery mode.

real estate cyclesAfter their first month in this New Year, the Dow Jones Industrial Average fell 5.2 percent while the S&P 500 declined 3.6 percent in January. This follows 2013 with double-digit gains for both.

Especially notable is the market’s declines in the last week of January, which may have led some investors to scratch their heads as they think about 2014 investments. There could be a lot of confusion about where to invest their money.

Investment Confusion Infuses

Should they stay away from stocks? What about bonds?  Where should they invest?

Help is on the way and one thought is prime real estate markets; they have recovered well as they were without exotic loans and areas.

Other opportunities exist in regions that continue to be depressed as well. Whether as secondary markets or submarkets, such as Riverside County, CA, Las Vegas and Phoenix. They remain 20 to 40 percent under pre-crash levels. These markets not only provide an investment opportunity because of their prices but also from their historical volatility–they sit at the top.

Getting Started

Investors can take advantage of this through a few different ways but it’s important to start with some professional guidance.

First, you will need to invest in either a professional or Fund Manager that brings experience in diverse markets. Review his past performance by learning about previous investments and asking questions.  These veteran professionals should not only know when to get into a market but also recognize the right time to exit. And most importantly, can they clearly show their success in this area through specific examples of projects, deals, and investments?

Second, confirm this professional has “skin in the game.” In other words, if he makes a recommendation to you for a certain area to invest in, he should be investing in it as well. This term was coined by Warren Buffet and we all know how this has turned out for him.

And third, conduct your own due diligence and determine if the professional’s company is legitimate. It can be as simple as administering an Internet search. Along with new laws, it has become easier to learn about fraudulent professionals quickly and online.

But if you really want to feel comfortable with your representative or Fund Manager, maybe it’s time to go old school. This means looking someone in the eye and shaking his hand before doing business with them!

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