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We know the old saying “when life gives you lemons - make lemonade.” We all get our share of lemons - sometimes a bit more than our fair share. But sometimes a financial setback can give you  perspectives, teach you lessons and hand you opportunities that pay off life-time dividends.
Let’s start with lessons learned. Always pay attention to extraordinary popular delusions and the madness of crowds. The crazed crowds didn’t just believe that housing prices could never tank - they thought that home values would continue their stratospheric rise. There was one simple indicator they forgot to pay attention to - affordability. When people with median incomes can only dream of affording the median priced house - that’s all you needed to know. Here's some sage advice backed up by the best articles we have on real estate.
Because housing is the single largest investment the average family makes - you should always take your sanity into account before you buy and you should know at least as much as your real estate agent. Be sober and read up on it. Take a little hard-nosed advice from your humble scribe at livecheap.com. Over the last thirty years, I’ve done over a dozen real estate deals and every single one was profitable. And if you want to know how I did it, consider spending an hour reading up on some of the lessons I learned before venturing out and buying your first house. Start by answering this question - Is Now a Good Time to Buy a House? If you’re dreaming of becoming a real estate mogul you might want to consider Eight Reasons to Think Twice Before Becoming a Landlord. But if you’re confident that you can handle the challenges of being a land baron, learn to market time your real estate purchases. We’ve put together Twelve Market Timing Tips for Real Estate Investors. Speaking of market timing; ignore the projections of the real estate professionals. Six months ago, we published an article titled Five Reasons Real Estate Won't Be Going Sky High Anytime Soon. I think we were spot on in warning people to dampen their expectations about any miraculous recovery in real estate prices. Don't expect to get rich quick.
If you’re buying a condo, pay attention to the condo fees because Not All Homeowner's Dues are Created Equal. Be sober because when you come right down to it Buy vs. Rent: They Both Suck. And keep in mind that you need to be responsible for your own purchase because there are at least Five Things That Your Real Estate Agent Will Forget to Tell You.
Pay a lot of attention to how you finance your house. Right now mortgage rates are ultra low and you should be able to snag a 4.5% 30 year mortgage if you have excellent credit and a 20% down payment. Find out when it makes sense to pay points on your mortgage. Remember You Can Negotiate Anything in a Real Estate Deal. All’s fair in war and financing so learn how to Keep Your Mortgage Broker Honest.
If you’re young and just starting out remember the old real estate adage - location, location, location. If you really want to make money in real estate, the best advice is to study up on which regions in the country show the best economic promise and relocate to the best market you believe will make you a real estate millionaire. Because you can always make money in real estate almost anywhere but you’ll make a ton more in an area with high paying job growth. When it comes to real estate, trust me - Your Destination is Your Financial Destiny.
Sixty percent of self-made millionaires make their fortunes in real estate. There is a reason for that - you deal in a market where people are your own economic size. If you have an edge as far as vision goes and if you’re patient and search out the best deal and take the time to learn the ropes - there is no reason that you can’t make a nice little fortune in real estate.
If you’re serious about real estate, this Great Recession maybe the best thing that ever happened to you. It’s a buyer’s market, there are some unbelievable deals out there and the terms of financing are the best they’ve ever been.
One last thing, ten or twenty years down the road when you witness the next real estate craze and the crowd gets delusional and shows symptoms of collective madness - sell them your real estate and find a nice place to retire!
Ahmed Amr is an economist and the author of The Sheep and the Guardians: Diary of a SEC Sanctioned Swindle .
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