By Donna Robinson
The author has permitted the reprinting and redistribution of this article.
Is your investment income looking a bit pale and fatigued
Do you become nauseated at the site of your profit and loss statement Are you itching to sell properties that are losing money Chances are you’re suffering from a lingering case of anemic profitosis.
Sooner or later many real estate investors begin to show symptoms of this affliction. Occurrences of this disease are most common during times of transition in the real estate markets. Like bad weather, the housing market meltdown caught many real estate investors totally unprepared.
This has resulted in many investors being stuck holding properties that just won’t move. This extra inventory can leave you feeling bloated and irritable. The result can be a devastating case of anemic profitosis.
One of the primary causes of anemic profitosis is severe swelling in the taxinus maximus. In most markets, this chronic condition usually develops slowly over time, and tends to get worse year by year if left untreated.
In some areas swelling property tax rates have all but wiped out positive cash flow. In extreme cases this can lead to a very bad rash of selling among landlords who did not realize that they were paying too much for their property at the time they bought it. Like many afflictions, anemic profitosis can be difficult to detect in the early stages.
Another common cause of anemic profitosis is buying pre-construction at near full price, then discovering afterward that there is not enough appreciation to cover your costs. This painful condition is often accompanied by sleeplessness, migraine headaches and multiple trips to the lenders office to beg for deferred payments. Symptoms include buying investment properties in markets that are already overbuilt and oversold to investors.
Chronic cases of anemic profitosis often arise when real estate investors associate with high-risk groups. Chief among such groups are marketing gimmicks that offer to find houses for investors.
Symptoms of this malady include paying a substantial fee to join a group or club that will find the houses, arrange for your financing and take care of all of the details for you. A key symptom is the fact that you do not need to know anything about real estate investing. In many cases this leads to swollen purchase prices which can inflame or burst your budget, leading to severe financial emergencies. This situation can also be difficult to detect in the early stages, so it is best to avoid all contact with such high risk groups.
The only known cure and the only known way to prevent anemic profitosis is to develop an excellent understanding of real estate fundamentals. Investors who are immune to anemic profitosis or have recovered from it have discovered that the profit is really made when you buy; therefore Buying Right is the key to avoiding a nasty case of anemic profitosis.
Buyers-Anonymous is full of recovering investors who admit that they got involved in deals they did not understand, with people they did not know.
Investors that earn healthy profits in any market will tell you that they don’t buy anything unless the price is right. But these investors have the ability to determine what the right price is; because they understand the fundamentals of the market they’re working in and generally choose a more conservative, common sense approach to their investing strategy.
The bottom line is that all strategies work sometimes but no strategy works every time. In order to understand what strategy will work in a given situation it is necessary to understand the fundamentals of that particular investment and choose the strategy that will work best within the given circumstances.
Fundamentals will affect your strategy choices, but strategy choices cannot change the fundamentals. For example
Equity is a central fundamental issue. Simply put, the more equity in the property, generally the better the profits will be. It is much more difficult to make a profit from low equity deals than it is to profit from high equity situations. Equity gives you more flexibility, and more exit strategy choices.
Property Taxes are a major fundamental issue. No matter what type of property you purchase, no matter what investing strategy you choose, property taxes will affect your profitability.
There are many other fundamental issues such as location, area demographics, and available inventory, just to name a few.
Adaptability is the key to avoiding chronic cases of anemic profitosis. The ability to adapt to changing market conditions comes only from understanding how the fundamentals will affect your real estate investment.
Whether commercial or residential, healthy long-term real estate investing requires the ability to analyze your market, and make adjustments to your buying and selling strategy for maximum profitability.
Whether you are suffering from a lingering case of anemic profitosis, or you want to avoid this affliction entirely, you’ll need quality investing education that teaches you how to understand the fundamentals and then apply them to create profitable real estate investing opportunities in any market.
Donna Robinson is a real estate investor, consultant and market analyst, based in Atlanta, GA. You can get free information about avoiding the disabling effects of anemic profitosis on her website httpwww.REIUonline.com
If you would like to take advantage of the market and learn how to invest in real estate and you are local to the Dallas Fort Worth area, I know a really great teacher and mentor here in Arlington Texas. Please take a look at his web site: DennisJHenson.com, Dennis has a great Mentoring and training program, I know because I am one of his former students. I learned a lot from his one on one teaching technique. – Michael Harman 817-457-7572 firstname.lastname@example.org>