Is there any Profit to be Made from the Recent Real Estate Slump

Serious real estate investors shop when everyone else forecloses, sells or panics. However, few try to guess when markets will rebound; timing is tricky even for insiders who track trends and talk to experts. Small real estate investors finance within their means, seek out location, location, location: region, neighborhood, house. They don’t know when prices will rebound – they know where.

Residential real estate is close to some regional opportunities and services, further from others. It shares community and neighborhood problems, but has others unique to that street, lot or house. Assuming sound house design and construction, location provides risk and reward.

First, consider long term community prospects. San Francisco Bay Area home prices, for instance, rose sharply during the “dotcom boom” but didn’t fall back much during the following “tech wreck”. Why not? Because Bay Area financiers and industries repeatedly adapt quickly and rebound; “angel” investors invest in laid-off employees or new or even bankrupted entrepreneurs; local universities and companies constantly import brilliant motivated people.

Second, how well placed is the lot? What work, school and leisure opportunities are nearby? Draw circles a half-mile out, then a mile, two, four. Measure exact road distance to downtowns, malls and industrial parks. How often does transit run between these and your lot? How late? How easily can you bicycle or walk there? How safely can children do so?

Look at broadband Internet access: Some jobs require telework from home; you can’t rule out renting or selling to finance, software or eBay professionals.

Third, look at the house relative to its landscape and neighbors, especially at how this affects maintenance and utility costs. Where does rain and ground water go? In wet climates, do you get runoff or rising rivers? Do basements flood?

Utility bills (power, water, heat) rise with energy costs. Demand to see recent bills. $100 less paid in bills means potentially $100 more charged in rent or paid off mortgage. Look for obvious energy savings. In colder climates, do big windows face South at hardwood trees? Do evergreens, hills or other houses protect the house from North winds? In hot climates, is the house shaded at noon in summer?

Banks ask these questions: They want you paying mortgage, not repairs or utilities. “Green” mortgages offer better rates and more money on transit systems where people can live car-free and accordingly pay more mortgage, less transport. Some lenders also provide financing for expert-recommended upgrades to insulation, windows, heating and cooling by reputable contractors.

* ground source heating and cooling loops – drilled like wells down to where temperature stays steady year-round – run on less than half than running air conditioning or furnaces

*earth banked around properly insulated and sealed foundations provides similar benefits and also re-routes water

*green roofs improve insulation, slow water flow and integrate well with rooftop decks

Look at your home or potential purchase. As energy prices rise, people switch to telework, retire on fixed incomes, who will want it? What’s missing? Trees? Triple-glazed windows?

Moving within your community to get broadband or nearer bike paths, transit, lively streets, schools and cultural events will pay off especially with green upgrades and mortgages. Buy now! But when moving away from these: think twice, bargain hard, offer low, wait them out, upgrade, sell when amenities arrive.