{"id":104258,"date":"2018-12-03T11:14:15","date_gmt":"2018-12-03T18:14:15","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=104258"},"modified":"2023-11-07T13:41:41","modified_gmt":"2023-11-07T20:41:41","slug":"im-worried-real-estate-correction","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/im-worried-real-estate-correction","title":{"rendered":"5 Reasons I\u2019m Not Worried About the New Real Estate Market Correction"},"content":{"rendered":"

There is more and more talk about a new real estate correction happening. It\u2019s smart to be alert and aware of how the market is changing. But it\u2019s even more important and wise to be ahead of the curve and to have efforts in place to weather the storm.<\/span><\/p>\n

They say that the Manhattan property market has been in a correction for a year already<\/a>. Some think that will keep spreading\u2014though there are many others in the media saying we won\u2019t face another crisis like 2008.<\/span><\/p>\n

Whether or not you\u2019ve experienced a correction, there <\/span>are things you can do now to mitigate risk when it happens. Here’s what I do personally so I don’t have to worry as much when I hear news of a possible market correction.<\/span><\/p>\n

5 Reasons I\u2019m Not Worried About the New Real Estate Market Correction<\/h2>\n

1. I buy on cash flow, not appreciation.<\/h3>\n

My real estate investing model is to acquire income properties. I\u2019m not counting on flipping or gambling on appreciation. That seems especially dangerous right now. The numbers have to work up front, and I have to be able to hold it. More recently, I moved up to multifamily apartments, which are even more resilient during tougher economic times.<\/span><\/p>\n

\"great-deal\"
\n
\nRelated:<\/strong> With Markets Shifting, Should You Invest in Real Estate Now\u2014Or Wait to Buy?<\/a><\/em><\/p>\n

2. I focus on growth markets.<\/h3>\n

There may be some housing markets and cities that have peaked or even surpassed their recent peaks already. Still, there are also markets that are growing and have plenty of room for growth. Even within these cities, it is best to make sure not to be investing in the worst neighborhoods, which have poor performance and crime rates that bring down values. Initial cash flow projections and returns on investments in those lower income neighborhoods may look good on paper, but the longevity is not there. That is why they frequently change hands to different owners in short time periods of time<\/span><\/p>\n

3. I’m selective.<\/h3>\n

ATTOM Data says that only just over 30% of houses flipped in the first half of 2018<\/a> were bought as distressed properties. That means most investors are picking full-priced properties (or higher) off of the MLS. They are gambling on appreciation to sell them for more or are putting little rehab work in to them to sell. You may want to be more selective. I probably now look at 175 to 200 properties before pulling one down to work on.<\/span><\/p>\n

4. I stick to the numbers.<\/h3>\n

The numbers have to work. It\u2019s still hard not to fall in love with properties, but you can\u2019t afford to. You aren\u2019t going to live there. It is far more profitable to just buy on the numbers alone. That\u2019s why I often say my best deal was this <\/span>118-unit apartment complex<\/span><\/a> I didn\u2019t do.<\/span><\/p>\n

If you let yourself fall in love with a property, you can be tempted to stretch numbers, make excuses, add in hope instead of facts, and generally sell yourself on a property you have no business buying. It helps to have a great partner who underwrites the deals on the math and always keeps you in check.<\/span><\/p>\n

\"analyze-multifamily\"
\nRelated:<\/strong> How I Found & Financed My Second House Hack in the Hot Market of Denver, CO<\/a><\/em><\/p>\n

5. I focus on service and long-term value.<\/h3>\n

When it comes to management, I\u2019m focusing more on service and making apartments “communities.\u201d So, if or when rents drop, then that can give us the upper hand. If another community has lower rents or is marketing special deals, but our service is better with the rent rates a little higher, that is value we offer, and folks will see that. <\/span><\/p>\n

People have been burned so badly and frequently in so many aspects in this day and age that they just want a business that will do what they say. It\u2019s interesting that this basic level of honesty is so rare\u2014and that’s good for us. It’s sad to see what will happen to so many other brands and jobs because they are trying to squeeze every dime out of people with sneaky tactics. People know they can trust us. They will stay. They will tell their friends, family, coworkers, and people they meet in the coffee shop or gym. That means lower turnover rates, and it adds far more net profit to our properties.<\/span><\/p>\n

Conclusion<\/h2>\n

There may or may not be a housing correction at play. No matter when it comes or how deep it is, there are smart adjustments investors can make now to avoid risk. If you think bigger and longer term and aren’t drawn into stampedes in either direction, you should be OK.<\/span><\/p>\n

\"\"<\/a><\/p>\n

What do YOU do to sleep well at night despite talk of market corrections?<\/em><\/p>\n

Comment below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

They say that the Manhattan property market has been in a correction for a year already. Some think that will keep spreading\u2014though many say we won\u2019t face another crisis like 2008. Whether or not you\u2019ve experienced a correction, there are things you can do now to mitigate risk when it happens. Here’s what I do.<\/p>\n","protected":false},"author":12140,"featured_media":85296,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524,5528],"tags":[6641,6709,1530,6708],"class_list":["post-104258","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-for-beginners","category-real-estate-news","tag-buying-multi-family","tag-correcting-in-real-estate","tag-multi-family-investing","tag-real-estate-correction"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/104258","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/12140"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=104258"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/104258\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/85296"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=104258"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=104258"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=104258"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}