The Real Estate Money Mindset
33 Principles for Real Estate Financial Wellness
by Allen Smith
Copyright Allen Smith 2006
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Published by Allen & Allyn Books, a division of Allen & Allyn, LLC.
Copyright © 2001 by Allen Smith
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Introduction
The turn of the new millennium saw some very astounding events in the United States’ real estate industry. Unfortunately, the events of the 9/11 terrorist attacks and the decline in interest rates helped to increase buyers’ purchasing power; thus, making it most cost-beneficial to buy real estate as opposed to renting it. All of these facts helped create the frenzied seller’s market that we have experienced since 2003. Even the novice real estate investor was taking advantage of the real estate boom and seeing a gainful return on their investment, while potential buyers were cornered into paying inflated prices for resale housing.
As the real estate explosion suddenly levels off, most investors are beginning to question whether the real estate industry is still a profitable one. The market is normalizing itself, and the neophytes who were able to profit from real estate investing are now tucking their tails between their legs and running to find the next, quick buck. They have concluded that the current condition of real estate is too unstable; therefore, their risk-adverse nature has triggered them to divest their funds from real estate and into another investment source with a lower potential for risk. But, for the industry-savvy experts, these times are seen as the most opportunistic ones.
I once heard a story that revolves around the great depression. The name in the story may vary from John D. Rockefeller to Joseph Kennedy, depending upon the storyteller, but the narrative went as follows:
Before the great depression, which started in 1929, oil Baron and humanitarian John D. Rockefeller was getting his shoes shined. During this time, the young man shining his shoes decided to pass along a stock tip to John D. Rockefeller. After the shoeshine was finished, John D. Rockefeller immediately went out and sold all of his stocks. His rationale: when amateurs start getting involved in the stock market, it is time for the professionals to get out.
And, this is the same premise that current real estate professionals have taken, today. The real estate boom became so saturated with amateur investors, that the market became too unstable to support long-term investors on a whole. But, as the market steadies itself, proficient real estate investors are singing praises of joy as they watch the influx of amateur investors flee for “greener” pastures, because the true investor knows that the ownership of land and real property in America is the key to building wealth. And, as the number of investors begins to thin out, it leaves even more opportunity for the true investor to get back to reclaiming their market.