How to Make the Right Moves in Every Phase of the Market Cycle

Let’s talk about when it is or is not the right time to actually jump in and start buying real estate.

What Goes Up Must Come Down

First of all, understand that real estate goes in cycles. Normally, it goes in about a seven-year cycle; it will go up and then it’ll either go sideways or it will go down. But guaranteed, it will go in cycles.

Whether you’re buying, selling, flipping, or whatever it is you do, you want to make sure that you are in the right part of the cycle for whatever your business model is. When you know what your market is specifically, that will help dictate whether or not you should make a business decision.

Stick To Your Strategy Unless Change Is Justified

Now, never, ever change your strategy just to change it. You always have to make sure that you are looking at the data where you live. For example, if you live in a city and that city has one type of industry and that industry is affected because of the down economy, you may have to change your business strategy to still achieve your goal.

But know that the only way that this happens is not by emotions. This is done by you focusing your energy and looking at the data.

I’ll give you an example. When I used to flip properties and wholesale them, when the 2008 recession came, I changed my strategy because now there were not as many buyers out there, because nobody could get a loan. So I started to hold the properties because it made more sense.

I was able to get better deals on the properties. I couldn’t get rid of the deals, so I decided to buy and hold them. It was a way that I changed my strategy based on the current environment.

Do Not Focus on Macroeconomics

Make sure you’re being very careful when you’re watching the big picture news. You only really need to know and focus on what’s going on in your target market. That will tell you whether or not you’re making the right or wrong decision for you and your certain criteria.

Act Based on Sound Judgment and Intention

It’s very important that you are focused and intentional in what you’re doing, and you’re not just reacting based on emotions. I don’t know anyone who has ever made a knee-jerk emotional reaction in a business decision and been glad that they did it.

There is always a market. It is either a buyer’s market or it is a seller’s market. And it’s never normally the same.

Even if buyers cannot get deals, that means sellers are maybe getting a good deal. So you may want to shift to become a seller. Same thing if it’s vice-versa. And that’s what you have to understand.

Wealth does not evaporate, wealth shifts. And so you want to make sure that when wealth shifts, you are able to pivot, too.

How do you adapt to changes in your investing environment?

Let us know in the comments.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.