Owner carryback financing has always been a great way to sell property. With real estate lending tightening, there will be even more being done. This provides several opportunities for us as investors, including purchasing those loans.

FINANCING

The meltdown in the sub-prime market has been in the news lately. The large lenders and pools are requiring  sub-primes to hold higher reserves for default and tighten credit requirements. This has bankrupted or forced out over 10% of the sub-prime market.

But the sub-prime market is not the only concern. Inventory and days-on-market are increasing. This creates pressure on property sales prices. And since prices are not increasing at the breakneck clip of the past few years, those with adjustable rate mortgages and high debts are not able to easily re-finance their way to lower rates.

This time around, these factors, rather than higher interest rates, will drive the number of foreclosures up. Some are predicting that foreclosures could easily double through 2010.


WHAT DOES THIS MEAN FOR YOU?

That sounds like opportunity for the investor. But you need to be careful. Your deals MUST be better than you were getting during the last few years because you will need to be able to sale at a good price as well. Expect to make more concessions when selling.

Rental rates have already started firming up over the last couple of years and should continue. Some investors are finding they can raise their rate as well. Usually, this happens when interest rates increase forcing would-be buyers to rent instead. This time it will be the shake-out of those marginal buyers with the credit tightening.

If you have been riding the market over the last few years just quick-turning property, you should consider holding some property for cash-flow and tax benefits.


THE MARKET PULSE

You must keep an eye on what the market is doing to make your best decisions on buying, selling and renting. Read local real estate articles in the paper. Watch local numbers, such as average sale prices compared to last year, days-on-market, and number of foreclosures.

Also, keep up with what other investors are experiencing in your area. What are they finding works?

If you want to survive as a real estate investor, you need to be a chameleon—-able to change with the market. The more knowledge you have to make money, the better prepared you are for changing market conditions.