Author name: Erion Shehaj

The majority of my writing here covers real estate investment strategies and mindsets you can use to become wealthy with long term real estate investing. In various case studies, I have shown you how to create a six figure income  and how to retire in seven years  etc. by making smart real estate investments tied by the common thread of a solid Blueprint strategy.

And that’s all well and good. We all can benefit from a little more “big picture” insight to help us design and take charge of our own financial future. But when you get down to the dirty details, the execution of such plans usually ends up being a lot messier than those projections. It’s one thing to look at  and intellectually understand the mathematical implications of a strategy that assumes flawless execution. It’s another to actually execute. Think about all the things you have to contend with when making an important financial decision. We all want to avoid risk where possible (risk aversion) which leads to uncertainty (indecision) about whether this is the right move (wanting the best deal possible) which leads to procrastination and paralysis by analysis (inaction).

Sometimes knowledge of  the path that leads the opposite way can illuminate the path that leads to what we want to become.

In the context of building wealth through a disciplined approach over long periods of time this is not only true – it’s eyeopening.

You see there’s this massive myth in the realm of real estate investing  that has been propagated by multiple books and has been accepted as truth by most.…

Sometime around the summer of 2013, the investing landscape in Houston began to change at a rapid pace. Demand soared, inventories shrunk to record levels and the Houston real estate market lit up like a wildfire.

Bank owned foreclosures, the perennial sweethearts of investors everywhere that had accounted for one in four sales just a year ago, now barely contributed six or seven percent. The few properties that banks were bringing to market were either inaccessible to investors (in favor of owner-occupants) or priced at market prices despite the need for repairs.

Meanwhile, builders started ramping up construction to complete subdivisions that had been developing at a snail pace and break ground on new communities. But as one builder told me, “after five years of increasing construction costs and stagnant prices the market was finally allowing them to raise prices”. And raise prices they did. Same subdivision, same property that had been selling in the high $140s, first went to the mid $150s then mid $160s in six months’ time. Fortunately, rents kept on rising right alongside prices so it made sense up to a point. Then prices rose out of reach.

Finally, the owners of existing homes with plans to sell started setting their pricing sights ever higher boosted by anecdotal evidence of neighbors’ homes selling in a matter of days at full price and multiple bids.

As a result of this combination of higher demand and tighter supply, we ended up with record numbers in sales, prices and inventory for 2013:

So what does this mean for investors in 2014?