Now Is The Perfect Real Estate Market, Says HomeVestors CEO

In the most recent USA Today, an article entitled, "Many Investors Feel Like Running Away from Homes", by Matt Krantz, suggests that by 2002, many investors were tired of the low returns from the tanking stock market -- and barraged financial advisors to sell their stocks and help them get into investment real estate properties. Now the tables have turned, says Krantz and investors want to get out of investment properties and back into stocks.

Curiously, Krantz begins with two investors who made out quite well with real estate.

Anticipating that real estate was going to turn, one investor sold his properties and put his money into equities. He did so well he's living off the dividends and interest and traveling around the world, but the principal came from real estate.

Another investor turned a home that had appreciated three-fold in ten years into a rental property but found she didn't like being a landlord. She's had to put $56,000 back into the property and now wants to sell and move into stocks when "prices firm up." She whined to Krantz she didn't think it was worth "the headache."

Did this investor not realize that properties have to be maintained and updated to continue to produce top rents? And, is there anyone out there who wouldn't be happy to take on a few renter complaints for a $340,000 profit?

Cry me a river. There's a difference in being an investor and an opportunist, just as there's a difference between the professional and the dilettante.

As Krantz continues, he never mentions that there are many reasons why someone would invest in real estate besides asset appreciation.

Explains Dr. Hayes in a letter to USA Today's editor, "USA TODAY's analysis did not account for income from rents, depreciation tax benefits, tax-free access to accumulated equity and the underlying stability of the value. Real estate doesn't lose 50 percent of its value in a few hours or days. Investors have the ability to substantially magnify returns by using leverage."

He says home price comparisons are misleading because the prices don't include the equity gained over time.

"When investors consider long-term benefits in their analysis," says Dr. Hayes, "real estate has the potential to blow the market away in terms of cash-on-cash returns. It is important for the American consumer to understand the pros and cons of investing both in the stock market and in real estate."

There are a few other problems with the story:

"At my company, HomeVestors, we know hundreds of investors who are doing anything but running from real estate," says Dr. Hayes. "They are buying because they understand this is the perfect market."

So what makes the perfect real estate market to an investor? "Supply is greater than demand. It's a buyer's market, and in this market there are more opportunities to buy properties at lower prices," reasons Dr. Hayes. "As investors, this is the market we wait for! At HomeVestors, we specialize in buying good properties at discount prices, even though some of the homes may be ugly. We can turn those properties into desirable homes, giving people a safe, clean, comfortable and convenient place to live."