Interesting questions have come up lately. Will the real estate market continue to climb? Will it soften? Will it crash? Has the real estate profit train left the station?

Although no one can provide an answer with guaranteed results, it is safe to say that the market is slowing down in a lot of areas, but by no means has the opportunity passed as long as you stick to a couple easy rules.

1. Know your market. Know what real estate is selling for in your area. Know what the expectation is going forward (as far as growth rate, if any). Have you noticed the market slowing down? Are more houses available or on the market longer? Are builders starting to advertise “incentives” when they had been particularly silent in that area until now? When these items occur it becomes fundamentally important that you are buying property under value (so as to realize an immediate profit or equity). If you are buying on “spec” – hoping it will go up in value – you could be the one holding the bag in a declining market.

2. Always, always, always buy real estate that will cash flow. In other words, when you go out and buy a home, always make sure that you can rent that home for at least the amount of your mortgage payment (including taxes and insurance).* Many people make the mistake of thinking they can make the mortgage payments only to realize that they can not rent the property for the money they need to cover the mortgage, taxes, insurance, and repairs. Certainly if you plan on “flipping” the property immediately you can consider ignoring this rule, but a word of caution. If real estate continues to slow down it will be much like a game of high stakes musical chairs – don’t be the one without a seat!

Lastly, I am repeatedly asked if interest rates will continue to go up. Well, let me say that no one knows for sure but I highly suspect you will continue to see a rise in interest rates at every Fed meeting for at least the next year or more…(if I am wrong, I will just delete the Blog post - just kidding)