By Chris Knoppe, Ohio Rehab Loans

As the economic landscape continues to change investors must constantly survey the scene and plan their investments accordingly.  In my opinion, 2009 is the time to crank up your investment activity.  If you’re a beginning investor who has been wary of getting started, or an experience investor who has been waiting on the sidelines due to market uncertainty, now is the time to get in the game in a very serious way.  Why?  Because I believe that home prices will bottom in 2009 and I also believe that the down turn in the economy will hit a low by year end.  This opinion is founded on the fact that our country’s (and the rest of the world’s) government agencies & officials have realized the severity of the problems and are finally taking action to correct things via lower interest rates and economic stimulus plans.  We will also see a peak in foreclosures, causing the amount of bank owned houses to gradually decrease thereby slowing the real estate fire sale that we are now witnessing.  I also believe that there could be specific legislation passed offering additional home buyer incentives in order to help stabilize home prices.  All of these things should boost lending activity, which is really the heart of the housing problem. 

What if things don’t turn around so quickly?  That’s fine.  You don’t need to guess the bottom to get started because you can’t build a real estate portfolio overnight.  It takes years of buying houses to build a sizable portfolio.  Smart investors were buying in 2008, will continue to buy in 2009, and still be buying in 2010.  A bottom occurs slowly, and prices will not shoot up instantly once the bottom hits.  Prices will most likely hold steady for a year or two and slowly rise thereafter.  An aggressive but prudent investor should be buying 2-10 houses each year depending on their financial strength.  Even though now is the time to buy, one must do so at a comfortable pace.  Only those with substantial balance sheets should be buying more than 5 houses a year because the easiest way to run into trouble is by taking on too much too quickly and not having the necessary cash reserves for unforeseen problems.    

The important message here is to start buying houses.  Don’t make any excuses because you will regret it.  If you are short on cash, start saving immediately.  Decide if investing is important to you and cut out any extra expenses in your life.  While you are saving you can also help other investors with deals to earn money.  If you have damaged credit, begin repairing it immediately, and in the mean time, partner with someone who can provide funding for deals. 

For most investors, the only way you can continue buying houses without running out of money is to buy houses that need repairs, fix them up, and refinance them based on their fixed up value.  This way you are re-cooping most, if not all, of the money you have invested and can move on to the next house.   No matter how much money you have, if you continue to buy houses with an 80% purchase loan, you will eventually run out of money because you have 20% invested in every deal.  Buying, fixing, and refinancing is the best long term wealth building strategy.  For most investors, this strategy posing two challenges in today’s market: the first is finding the money to buy & fix up the house before obtaining the refi loan.  That part is easy- Ohio Rehab Loans now offers programs to fund the purchase & repairs for up to 15 months with interest rates as low as 8%!  The second challenge is finding a bank willing to refinance the property once all the repairs are made.  Although this is more challenging now than in the past, there are banks that will do it.  Ohio Rehab Loans helps our customers find a refi outlet as part of our loan process.  For those who can’t qualify for refinancing, we will partner with them on buy, fix, & sell projects so you are still able to make money!

Go out and make 2009 the year you step up your investment activity!  You’ll be glad you did.

Please note that this column reflects the opinion of Chris Knoppe.  Comments or questions can be directed to Chris.Knoppe@OhioRehabLoans.com. For more information about Ohio Rehab Loans visit www.OhioRehabLoans.com or call 614-433-0570.