Terry Anderson, CFP
5347 South Valentia Way, Suite 140
Greenwood Village, CO 80111
Terry M. Anderson, CFP
Investing in a Volatile Real Estate Market
Local Financial Pro Gives Investors Seven Tips to
Navigate the Real Estate Market
GREENWOOD VILLAGE, CO (October 2, 2008) – Throughout our nation’s history, investing in real
estate has been one of the fastest ways to build wealth, but news headlines on the subprime lending
crisis and lingering For Sale signs on neighborhood lawns indicates that this once tried-and-true
investing method indicates a down real estate market.
According to the Center for Responsible Lending, 2.2 million families with a subprime loan issued
from 1998 through 2006 have lost or will lose their home to foreclosure in the next few years. That
amounts to a projected maximum equity loss of $164 billion.
But according to Terry Anderson, a Denver-based independent financial professional, successful real
estate investing is still a reality if an investor pays careful attention, conducts detailed research and has
Anderson provides these seven tips to successful real estate investing in a down market.
Focus on home sweet home. Many homeowners consider making renovations to their homes in a
down market. And while home improvements can add value to your real estate, Anderson warns that
any major renovations should be evaluated from a pure return on investment perspective. According to
the recent “Cost vs. Value” report from Remodeling magazine, this year homeowners won’t recover as
much of the costs for remodeling as renovators did in the past.
Play by the new rules for buying or selling. The bidding wars of recent years where homes sold for
more than the asking price are history and in many markets house flipping has turned into house
flopping. “There are winners in this new environment,” says Anderson. “First-time homebuyers who
have nothing to sell have plenty to gain as sellers stress over the glut of homes on the market. Although
signing the purchase and sale agreement may leave you feeling flush at having cajoled a boatload of
extras out of your builder or negotiated a steal of a price with a desperate seller, keep in mind that the
home you purchase today may not increase in value and may even decrease in value in the years
When selling a home, it has become increasingly important for sellers to work hard to impress buyers.
“In addition to the traditional sprucing up the yard with a few potted plants, sellers may also need to do
more to increase interest in a home,” says Anderson. “In a slow market buyers are especially
unforgiving and won’t overlook pealing paint or leaky roofs, so make these major repairs before
putting your home on the market.”
Take advantage of the current 15% capital gains rate. If thinking about selling a home and are
concerned that it has lost some of its value, all may not be lost. Any gains realized from the sale of a
property will be taxed at the current capital gains rate of 15%. However, it’s worth calculating
potential tax savings against what you may lose in a sale price, especially if you qualify for maximum
exclusion which can be up to $250,000 of the gain or up to $500,000 if you are married and file a joint
Scoop bargains with care. Foreclosures abound, but keep in mind that many require major
renovations. “Without doing your homework, you could end up making some costly mistakes and that
bargain foreclosure could turn into a money pit,” says Anderson. He advises that rather than chasing
subprime fallout, consider researching local developers who might be feeling the market’s pinch and
would be tempted to dump new property at a discounted price.
Consider becoming a landlord. “As you watch property values fall, you may consider buying that
second home and renting for the weeks your family isn’t vacationing in it,” says Anderson. “Although
you initially may prefer a small house, look for one with adequate land to accommodate future
expansion.” Anderson adds that while in vacation mode it may be a good idea to think about the
property’s proximity to recreational activities and a good school district. “Before you put on the
landlord hat, you should also think carefully about your own skill set and the amount of time you can
dedicate to managing your investments,” Anderson says.
Use the right REITs for the right reason. Real Estate Investment Trusts (REITs) invest in
commercial properties such as office buildings, shopping centers, apartment complexes and hotels and
are bought and sold on the major exchanges just like stocks. Because REITs must pay out 90% of
taxable profits in the form of dividends to avoid paying corporate income tax, they are an ideal choice
for investors who want regular income. Additionally, REITs broaden your portfolio and can zig when
equities zag. Those benefits aside, however, REITs’ last seven years of market beating performance—
before last year’s plummet—has investors overly-focused on return.
About Terry Anderson
Terry Anderson, an independent, fee-based financial planner and investment advisor representative
with Securities America Advisors, Inc., has over 28 years of experience in the industry. He specializes
in strategies for preserving wealth and assisting with strategic financial transactions while striving to
maximize investment returns. He takes great pride in coaching his clients how to detangle the
complexities of business transfers and the subsequent tax related headaches. Anderson is a believer in
preparing clients to “fish for themselves,” as evidenced by his educational mode of communication:
His highly regarded client based seminars.
Committed to a high standard of fiduciary excellence Anderson earned the CFP® mark of distinction
from the CFP Board of Standards, and is currently working to become a Chartered Financial Consultant®
and Chartered Life Underwriter®. He is a member of the Financial Planning Association, the largest
organization of professionals dedicated to championing the financial planning process.
Visit www.wealthbydesignandmanagement.com for more information about Terry Anderson and
Wealth by Design & Management.
When you need a knowledgeable professional to speak on complicated financial topics in an easy-to-
understand and engaging manner, please call Terry Anderson at Wealth by Design & Management.
Securities offered through Securities America Inc., Member FINRA/SIPC, Terry Anderson, Registered Representative. Advisory services
offered through Securities America Advisors, Inc., Terry Anderson, Investment Advisor Representative. Wealth by Design and
Management and Securities America Inc. are unaffiliated.