In 2007 and 2008, mortgage problems brought about a great many foreclosures and depressed prices nationally. Buyers were nervous about purchasing due to price drops, but more than that, many lost their homes and others couldn't qualify for mortgages from lenders with more stringent requirements.
When many see only problems, some can see opportunity. More demand for rental property is created in this environment. In many areas, there is no economic reason for people to move away, and prospects for continued population growth remain. Couple this with lower prices, and real estate investors could realize impressive gains with little risk.
The trick for investors is to recognize the potential, and to carefully examine the local market for hidden risk. If the economy is strong, industry and commerce are stable or growing, and population is not moving away, the stage is set for gains. The astute investor will carefully select properties in good neighborhoods with stable growth patterns. They may be foreclosures, or just homes that the sellers needed to move because their adjustable mortgages surpassed their payment ability. Buying right is the first step to real estate investment profits. Increased demand for rentals creates positive cash flow opportunity. Waiting for the inevitable return to price growth seals the deal.
