HomeVestors of America Inc. CEO John P. Hayes has had enough of the popular press knocking the housing market. 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:

• Krantz quotes financial advisors, but no sources in professional real estate. That's not exactly fair and balanced when you consider that financial advisors make their money selling equities and insurance, not houses.

• Krantz's subjects are mostly flippers not investors. The people who bought in Florida hoping to make a killing are "miserable." Not surprisingly, their financial advisor is telling them "not to make it worse." It's being overextended that takes away liquidity and flexibility, as much as the market. Their own greed bit them in the backside, as much as the market. After all, didn't they buy those properties with the intention of sticking someone else with a higher price tag?

• Professional real estate investors, none of which were quoted in Krantz's article, also change their strategy to suit the market. There are some markets where flipping houses is a great way to make money, and other markets where holding, renting and selling years later are a better way to make money. Most professional real estate investors know that money is made over the long term, not by flipping, just as equities investors know that daytrading isn't as profitable as buying wisely and holding.

• Stocks and homes can both be solid investments, but expecting them to perform the same way is foolhardy. Homes are highly individual and must be appraised individually, have large transaction costs, depreciating materials that require maintenance, and are subject to local economies to establish values. One share of stock is the same as another and all shares are highly liquid. Homes are low risk, while stocks are high risk.

In other words, comparing real estate with stocks is like comparing apples and oranges.

"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."

Published: July 3, 2007

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.