Adapting To A Changing Real Estate Market
Author: Richard Warren • URL: http://www.rehabberseye.comJune 16th, 2008 •
At a recent real estate club meeting much of the talk centered around the state of the market. This is certainly to be expected as investors were networking with each other and comparing notes. It is imperative that investors stay abreast of the trends and conditions if they are going to be successful. However, there was a distinct difference between seasoned investors and relative newcomers.
Investors who had been around for some time were looking for ways to meet the challenges of the day. They sought solutions to their funding issues and looked for creative ways to deal with problems. There were deals all around them, they just needed to make them happen.
Meet The Newbies
The newcomers were a different story altogether. Those that were fairly new to the game had never seen a market where money wasn’t easy and real estate didn’t always go up. They complained about lenders who wouldn’t fund their “no money down” deals or whined about being stuck with a property that they paid too much for in the first place. Others had bought into the fallacy that cash flow didn’t matter because the appreciation would make it all worth it in the end. Now they are hemorrhaging cash and see no way out.
Instead of asking how to make things happen, the newbies wanted to know when things would return to “normal.” They don’t seem to realize that they already have. The recently burst real estate bubble was the aberration, not the norm. Giving money to people who shouldn’t get it was the fuel that fed the recent market frenzy. It allowed people to pay too much with the expectation that a bigger fool would come along and pay even more. This was totally unsustainable, yet the newbies are waiting for this to return.
The Seasoned Investor
Investors who have been around for awhile know that any market has its ups and downs. When conditions change the successful investor adapts to the situation. When a traditional funding source dries up they seek out alternatives. Instead of pining for the old days, they create new techniques or revisit some tried and true older methods of doing deals. To make money they need to keep moving forward, they can’t be immobilized because something changed.
In the real estate jungle it is truly survival of the fittest. There is a common thread that runs through people who are successful. They keep going when others would quit.
Abraham Lincoln
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Tags: loan, mortgage, no money down, real estate, real estate investing, real estate investor, Real Estate Market
Joshua Dorkin
Charles Feldman
Ted Karsch.
Troy Schuricht
Anwell Tsai
Richard Warren
Jim Watkins
Rich- great post. We’ve been thinking quite a bit about this concept of late at our place – it’s clearly “not your father’s real estate investment market” anymore (to steal an ‘80’s marketing cliché). The playing field and the rules have changed in the past 18 months more than anyone would have dared to predict 2 to 3 years ago, and investors must adapt or perish. The most successful investors we’ve known never stray far from sound fundamentals. Successful investors today must assess their markets and projects with greater care than ever before. You’re also spot on about markets going up and down – the real estate market cycle is not a myth, it’s a hard reality that the successful investor is using to their great benefit today.
I meant to drop a comment earlier, but you’re on the mark once again Richard. You’re talking about the same entitled mentality that caused people to buy stocks at hyper-inflated prices in th 00s and then property a few years later.
The market is what it is. At any given point in time, that is the market norm. Get used to it or get lost!
Thanks for putting it so well.
Great post Richard! It’s good to hear other people recognizing that there are only a handful of people out there in the real estate investing world that know what hey are doing in this market. I only hope some newbies read your post and get attached to a mentor or partner that knows what they are doing and can help them succeed in this market.
I’ve found that the biggest difference between an experienced investor and a newbie is simply exposure. Experienced investors can make money in up and down markets because they’ve been exposed to different situations whereas a newbie usually knows one strategy and is star struck dreaming of riches through the “easiest and surest way to make money: real estate.” A good mentor some learning experiences and a newbie can turn into an experienced investor pretty quickly.
I think this is a great post and it sheds light on the fact that there are different types of investors out there. SO many Realtors get calls from investors and automatically give them the standard that they know what they are doing. Investor is a powerful title it seems, and some people just dont deserve the glory.
Good work Richard…..Real estate investing is really tuff reiky businesss…..ur take on it was really simple….
In St. George Utah we have noticed a huge difference in the market going from one extreme to another. The experienced real estate investors definitely understand the market is like the stock market. It will always fluctuate.
Excellent post to remind us all that the market will change, we just need to know how to adapt ourselves and prepare for the upcoming changes.