What Are the Best Markets for Real Estate Investing?

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Answered by: John, An Expert in the Investing in Real Estate Category
The following is from a White Paper submitted to Congress on behalf of the residential real estate investing industry.

Executive Summary – Industry Facts

Fact #1: The residential real estate investing community offers a free market solution to the housing crisis.

Summary: Government intervention, whether it is in the form of bailouts to banks, GSEs, or massive loan remodification programs, will not resolve the housing crisis. Before locating the solution to the problem, the crisis must be properly defined. The housing crisis is not that every American does not own a home. The crisis is threefold: there are too many unqualified homeowners, there is still uncertainty as to what buyers are willing to pay for homes, and there is a problem locating qualified owners. Residential real estate investors address this problem directly by purchasing distressed properties, finding an acceptable sale price, and locating qualified buyers. Endless bailouts and modification programs with skyrocketing re-default rates cannot do what the real estate investing community can, which is bring about a resolution to the housing crisis and restore stability to the housing market.

Fact #2: Residential real estate investors protect the interests of the American taxpayer.

Summary: The residential real estate investing community has neither sought nor received a bailout from the government. The transactions conducted by this community shine a light on the true value of toxic housing portfolios, and thus provide lawmakers with useful information on the type of assets and institutions taxpayer money currently is propping up. Recently, government-sponsored enterprises have argued that investor purchases of toxic assets are costing the American taxpayer. This charge is meritless. Investors are making fair offers for distressed assets, and do profit from subsequent sales of an asset that is no longer distressed. GSEs essentially want purchasers of their toxic assets to buy them as if they were not distressed, a proposition that is clearly unfair to the buyer. GSEs are NOT losing money on subsequent transactions with investors, GSEs lost money when they initially purchased the over-valued assets. Furthermore, most distressed properties are not able to be sold on the retail market, leaving the owner no choice but foreclosure. Mismanagement of risk at the GSEs and banks has cost the American taxpayer dearly, not the actions of residential real estate investors.

Fact #3: A thriving residential real estate investing market is essential to the health of the housing market and overall economy.

Summary: Most Congressional districts have at least one neighborhood that has been devastated by the housing crisis. Foreclosure clusters work in the manner of a domino effect, as one foreclosed property reduces the market value of neighboring properties, until an entire community is devastated. These foreclosure clusters spread throughout communities and not only impact home prices, but devastate local businesses and economies. Government intervention may provide short-term relief. But at the end of the day, someone needs to purchases these homes, often refurbish them, and locate qualified owners. The real estate investing community is comprised of the people willing to take those risks and help rebuild devastated communities.

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