The Illiquidity of Real Estate, The Best Deals That Aren't

Real estate expert and writer Steve Dexter, who shares author credit for "Buy and

Hold Forever: How to Build Wealth for the 21st Century" with long-time mentor, the late Dr. David Schumacher discusses why in the arena of real estate investing, owner landlords ultimately triumph, although quick income earned from riskier flipping can finance purchase of income-producing property. Investors can't afford to ignore the advantage real estate offers as the best legal shelter for taxpayers.

Assessing Future Value Of Real Estate

Dexter defines value as "the contemplation of anticipated benefits" with neighborhoods the "storehouses of value" key to investment potential. While middle-class neighborhoods tend to suffer blight with age, the reverse can also occur, and blighted areas like inner cities can undergo re-gentrification, regaining value as demographics shift.

Dealing With Tenants

Dexter is currently working on a book that includes strategies for achieving zero vacancy and eliminating rental income gaps. When screening renters, be alert to signs of trouble, including attitudes of entitlement and helplessness. Avoid the common mistake of inexpert landlords who start out as softies and only get tough after it's already too late. Wise landlords adopt a no-nonsense stance upfront, warming up to tenants only once they demonstrate their merit.

Consider Being Your Own Property Manager

Self-management of property is feasible, even from a distance, and it doesn't have to be an all-consuming job if you have a system in place for billing, upkeep, and the like. Recognizing that "tenants are on-site property managers," it pays to develop the right relationship. And don't be afraid to invest in potentially profitable Section 8 property.

Foreclosure Outlook

With mounting delinquencies adding to the millions already in the foreclosure pipeline, and bankers reluctant to release a flood of REO properties on a distressed market, Dexter predicts that credit is going to be tighter and demand weaker. Rents won't see growth in the period just ahead due to record vacancies and supply excess. But there remain hot markets like San Antonio, ripe for fast flipping to bankroll buy and hold real estate investments.

What's In Store For The US Economy?

Dexter wonders if like Japan in the '90s America might be in the midst of its own "lost decade." But "demographics are destiny," especially in real estate, where growth translates into a greater need for housing and a larger pool of renters. Our expanding population makes the US market less vulnerable in contrast to the shrinking Japanese populace.

The Illiquidity of Real Estate, The Best Deals That Aren't

By: John Beckham

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