Q.  My house is upside down.  Should I move or hold on? 

A.  First of all, welcome to the club.  All those late night gurus who touted "No Money Down" deals didn't ever consider that real estate would go DOWN.  That's okay because none of the geniuses in Washington did, either.  Real estate hasn't gone down since -- EVER.  Even during the Great Depression, it held steady for the most part.

But it's a brave new world.  There are three ways your house can be upside down:

1.  The mortgage balance (what you owe) is more than the current value of the house

2.  The payment is more than the rental income.

3.  Both

What you should do depends on what you plan to do with the house.  If the house is a long-term hold and is still cashflowing or break-even, then there's no need to panic.  The value will come back.  As long as your tenants are covering your costs, you may not be getting the return you want, but it's not eating you.

If the house you live in (your primary residence) is upside down and you can afford the payments (even if you don't like them) and you plan to stay, then again, sit tight.  If you have an adjustable rate mortgage, now is the time to contact your lender and nail down a fixed rate.  Some are willing to bargain, others will be in time.  It doesn't hurt to ask.

If your payment is more than the rental income, can you raise the rent, create more income from the property, get the lender to lower the payment?  If it is not a substantial "eat", can you carry it or is it covered by any positive cashflow from other properties?  What you do depends on how badly that property is cutting into you.

If you are both upside down in value and upside down in payments, do the math.  Is it a lot or a little?  Is it an annoying mosquito or an alligator?  Are your kids going hungry because of this property or are you just passing up on a new flat screen?  What you do with a property depends on how much it is hurting you and whether or not your overall portfolio covers the eat.

I know everyone wants to make money in real estate -- the name of the game is POSITIVE cashflow, but in today's economy, breaking even and holding on is considered a win. 

What we HATE to see is someone who has a house they can afford but panics because the value has decined and decides their only choice is to walk away.  If you can afford your house payments and the house suits your needs, there's NO REASON to walk away.  Yeah, it doesn't feel good to owe more than what the house is worth but time and rampant inflation will cure that problem.  If you weren't going to move for five years anyway, than sit tight.

Q.  I keep hearing that this is the best time to buy real estate because prices are so low.  But I don't know if they are going to go lower.  Should I be buying now? 

A.  Well, if you listen to Jay, you should never be buying anything at any time.  Jay is big into controlling properties and entities without holding anything in his own name.  It's a very good practice, especially in a world where high profile people become targets -- of lawsuits, kidnappers, golddiggers, etc. 

The full-on truthful answer is, "That depends."  It depends on where you are geographically and what is going on in your real estate market as well as your local and state economies.  It depends on where you are in life right now, how many people are depending on you for food and shelter.  It depends on your skill set and experience level.  It depends on the type of property you want to acquire.

That being said, let's talk about "acquiring" properties.  Take a look at Jay's article "What is a Good Deal?"  That should give you the right mindset before you enter into any transaction.

Next, go back through to your Real Estate Profiler (you did do the exercise in the Profiler, didn't you?) and take a look at what you discovered about yourself.  You will be looking for property that fits your profile -- geographically (your farm area) and mentally (single family homes to commercial tracts of land).  You should be acquiring properties that fit your lifestyle and experience with as little money in the door as possible without having to sign your name or give a financial statement.

Our advice?  Go for the property that has the biggest market for you to sell or rent to.  That would be single family homes.  In sheer numbers, more people look for single family homes than people look for duplexes, triplexes, apartment buildings, office or retail space or tracts of vacant land.  You want to be in front of a flood of people, not chasing them down all over hell and creation by onesie-twosies. If commercial property is your bailiwick, then stick with it.  You know it, you know the players.  But if you are a single family house person and are thinking of getting into commercial just because residential is down right now, DON'T.  Commercial is about to get hit hard and if you are not already battle-hardened, you will get your head chopped off.  We don't want that to happen to you.