On the front lines of the housing crisis
Most economists single out troubles in the housing market as the reason behind the deepest recession since the early 1980s. Martin Otto, the instructor in the DCTC Real Estate Property Management program, has worked as a real estate broker since 1971. With nearly 40 years of experience as a real estate sales manager, investor and company owner, Marty has never seen a housing slump like the one currently weighing down Minnesota and the nation.
“The collapse of the real estate market is unprecedented,” he said, “and very few people saw it coming.”
Marty noted that our problems started at the very top with Wall Street and the big investment firms. Loan standards were lowered to drum up more business. The rush filtered down to mortgage brokers, bankers, savings and loans, appraisers, Realtors and finally to the general populace. With new, more lenient loan requirements, many people were able to buy their own home for the first time—and they leaped at the chance.
Federal rules were in place to protect the consumer, including the Real Estate Settlement Procedures Act, or RESPA, but those rules were largely ignored. Everyone was making tons of money and no one wanted to upset the golden goose.
Thanks to a plethora of adjustable-rate loans, foreclosure rates eventually skyrocketed as homeowners, having been lured by artificially low teaser rates, were unable to make their monthly mortgage payments when interest rates climbed.
“We have an abundant inventory of homes on the market right now,” Marty said. “That inventory has to be absorbed to bring about a recovery.”
Even with the spiraling downturn and ensuing credit crunch, Marty was able to offer a number of proven ways to find tremendous prosperity in the real estate market.
“Residential properties are now selling for 15 to 20 percent below what they were 18 months to two years ago,” he said. “A savvy investor can buy a house, fix it up and sell it for a profit—what’s called flipping in the industry.”
Marty cautions that with the present inventory, an investor must be prepared to wait three to five years before selling. Renting to create income flow in the meantime is a preferred strategy, but in today’s soft rental market that can be difficult. Lacking property management skills, many investors are finding that their rental properties have become liabilities.
“Our program teaches students how to analyze the market and pay the right price for an investment property,” Marty said. “In real estate, you make money when you buy. My students also learn how to be competent and knowledgeable property managers. That skill set is in high demand right now.”
Besides working on their own or for property management firms, graduates of Marty’s program also find lasting success in community association management, a field that’s growing rapidly across the country.
“Buyers of town homes and condos automatically become members of an association,” he said. “Such associations are like small towns and managing one can be very complex. More and more associations are turning to professional property managers to handle day-to-day operations, including fees, insurance and maintenance contracts.”
Our program teaches students how to analyze the market and pay the right price for an investment property. In real estate, you make money when you buy.
Marty reported that the distressed housing market is convincing waves of real estate agents to skip renewing their licenses, a trend that’s creating a growing shortage of realtors.
“When the correction has run its course and housing starts to heat up again, people will be racing to get their real estate licenses,” he said. “I recommend starting the process now. Take the courses you need, get your license, find a broker and get some experience. Instead of waiting until the train has left the station, you’ll be perfectly positioned to take advantage of the inevitable upswing.”
Marty’s program emphasizes creating and following a sound strategic plan. In conjunction with real estate and property management training, he also teaches creative financing, including ways to buy real estate with self-directed IRAs as well as doing a 1031 Exchange to reinvest income property profits in another property without taking a tax loss.
Reversing the housing market collapse is widely considered the best way to bring back the entire financial system. Property managers and real estate professionals are on the front lines in the battle to save our economy. By working hard and applying their expertise, they are helping restore home values, which will in turn reduce foreclosures and unthaw the credit freeze, making the current recession a distant and cautionary memory.
Landing a Promising Career
The Real Estate Property Management program prepares students to manage and market residential, commercial, industrial and investment real estate. Students are trained to estimate the value of residential and investment properties across the nation. Coursework includes 90 hours of pre-licensing education required for the Minnesota Real Estate license examination.
ISEEK, the go-to source for education and employment info in Minnesota, lists the following salary data for the seven-county metro area:
Real Estate Agent
- Average wage: $19.68/hour
- Top earners: $37.47/hour
- Average: $28.20/hour
- Top earners: $49/hour