It’s taken a while to sink in but now I see it everywhere. People are saving, conserving, making better decisions in an overall bid to return to sanity. In real estate, during the last half of 2007 to the Lehman implosion in late 2008, we were booming. Arrogance was everywhere in the investment property market. With speculators the markets on the coast were overpriced and people started migrating dollars to cities like Memphis, TN. We were projecting 2009 to be an incredible year until the fateful day the financial markets collapsed.
It was easy to think I was a highly-talented mistake-free entrepreneur. Demand outpaced the supply of our investment homes. People bought at a feverish pace which ultimately caught up with many of them. But with prices solid, rents high, and economic growth happening locally how could it just suddenly stop?
Fast forward to 2009. Real estate investment has followed the US savings trend and has returned to more of a dividend stock approach. Deals must pencil in order for them to be purchased. Smart decisions, less frequency in purchasing and more price negotiation. And frankly, I’m humbled by 2009. As a real estate entrepreneur, the margin of error on business decisions is minuscule. Hell, I was speculating with the best of them. I bought in emerging neighborhoods within Memphis (which I’m still long, of course, since I have no choice but to be).
I like the new direction, although I wish the hangover of the big party wasn’t lasting so long. The lingering effects often make it hard to channel entrepreneurial energies. The relationships I’ve forged in 2009 have been the difference. Meeting new entrepreneurs with the burning desire, even in this climate, have kept me motivated. In fact, this year has made me a much smarter entrepreneur and real estate investor. Our team has been scrutinizing real estate deals for our clients to the nth degree. Problem is, appraisal issues are everywhere even though the conditions are now optimal for buying. I have enjoyed seeing monies come off the sidelines to purchase property in times like this. It shows American are a pretty resilient bunch with a deep bench for the tough times.
My bet is 2010 will see continued smart purchasing by better heeled investment home buyers. They’ll snap up incredible deals out there, rely less on creative financing schemes, and clean up in the profit category when the market returns. And when it does return, signs point to the recovery being very strong. I think to myself, what an interesting time in this world. I wish the crazy hours were producing as much revenue as they were in 2007-2008. But it feels the business is improving and evolving, because of the crisis, for the better. Technology will only compound this evolution and the real estate business will be better off than when it entered the crisis (albeit with lower prices).
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