A housing-price drop would not be bad for everyone. In fact, many canny real-estate investors have been hoping for just such a hit.

"You can make a fortune in a falling market," says Hugh Bromma, CEO of Entrust Administration and author of "How to Invest in Real Estate and Pay Little or No Taxes." You do it by buying low. Investors can build up rental property portfolios more easily in down markets -- if their initial pay out is smaller, they can more likely turn a profit on rents.

"You always want an investment property to make money from the get-go -- always, always, always," says Bromma. That means that rents must exceed expenses every month. It's even more important when prices are falling than when they're going up.

"If you don't buy a rental right," says Erwin Jackson, a Florida landlord, "by the time you pay the maintenance, insurance, taxes, and everything else, you won't have any money." Many investors who bought in at the top may not have the resources to ride out a bust and they'll be forced to sell out or even give their properties back to the banks.

The question becomes: How do you know when the price is right? and what is the opportunity cost of money you invest in real estate? are you investing for cash flow only or are you also investing for APPRECIATION?

Investors must familiarize themselves with statistics and crunch numbers before they buy. They have to know what a home can command in rent and how long it takes to rent a property.

A key stat is the "cap rate," which is a percentage based on the annual rents you can collect, minus expenses (not including debt  servicing costs, that is, mortgage interest payments) versus the property value. in other words, Cap Rate = Annual Net Operating Income (ANOI) divided by Value of the Property

For a property that costs $100,000 dollars and generates $650 per month in rent minus $250 expenses, the cap rate would be nearly 5 percent ($4,800 divided by $100,000). A cap rate of 5 percent or more should provide enough cushion to offset expenses. The lower the home price compared with the rent, the higher the cap rate.

To calculate cash flow,  you will need to deduct debt servicing costs or mortgage payments from ANOI. Debt Servicing costs will be contingent upon the type of mortgage program you have selected for your needs. Interest rate, term of the loan, down payment, interest only or fully amortized loan etc will affect your debt servicing payments and thus cash flow.

Softening markets can even sometimes have a positive effect on how much landlords can charge for rents by increasing the demand for rental units. In fact, rental market in Boston and Metro Boston area is extremely strong presently.

Anyone looking to invest in rental properties is to be "in cash." That way, they can act quickly to snap up some bargains. Bernice Ross, of RealEstateCoach.com, who has been in the business more than 25 years, says the most successful real estate investors she's known over the years have been contrarians. "They sell when everyone else is buying and buy when others are selling."

Smart investors may be gearing up for a shopping spree................................

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