How to invest in any market conditions
Realtor · St Petersburg, FL · Member since 2016 · 8 posts · 1 vote
I have concerns that the market may be peaking and reaching a point where values will begin to decline. What sort of strategies might be of good use in a declining market? I have thought I could buy and hold until values increase and just rent the property out. But it would make more sense to me to just wait until prices drop so I don't end up buying too high. If I were trying to flip I would be fighting the clock as the value went down over time. I am just very nervous about making a purchase right now and being unable to get rid of the property or make a profit off of it. What might be some ways I can protect myself so I don't pay a high price for simply investing at the wrong time?
Depends on your goal and market. If your goal is appreciation and/or that's what your market bears and you have forecasts of declining values, that's a tough spot. If your goal is cash flow and long term hold and you can find that cash flow, then a short (or long) term dip in property values should not be problematic as long as you continue to cash flow at your target levels. My rental property values likely dipped during the recession but rents actually went up a little....not sure what your market bears. I'd rather be in stable cash flowing real estate in a recession than other asset classes.
Don't buy it. Sell it. Don't need to own it to sell it. That's what RE agents and wholesalers do, they sell properties that they don't own.
The hotter the market and the closer to the peak I think we are, the greater the market risk and the shorter the holding period I want. In a market that's tanking, I buy and hold. In a recovering market that has not yet fully recovered, I'd prefer to flip. In a red hot market that looks close to being fully recovered, be a RE agent and sell off everything you don't want to or aren't 100% certain you can hold for the next decade. Truth in advertising: I'm no newbie but have not yet operated this full strategy, but have seen more experienced investors pull it off.
Don't buy it. Sell it. Don't need to own it to sell it. That's what RE agents and wholesalers do, they sell properties that they don't own.
The hotter the market and the closer to the peak I think we are, the greater the market risk and the shorter the holding period I want. In a market that's tanking, I buy and hold. In a recovering market that has not yet fully recovered, I'd prefer to flip. In a red hot market that looks close to being fully recovered, be a RE agent and sell off everything you don't want to or aren't 100% certain you can hold for the next decade. Truth in advertising: I'm no newbie but have not yet operated this full strategy, but have seen more experienced investors pull it off.
@David Faulkner I just keep it simple and tell folks the market tells me what to do. When it was cheap to buy we purchased a lot of homes. Now it is cheaper to build so we building a lot of homes. The market seems to tell me exactly what I need to do with out recreating the wheel.
I think most folks just over think things.
I'm just a simple guy but have done all the above in my market and a few others close by.
Hope all is well
Alex
I have concerns that the market may be peaking and reaching a point where values will begin to decline. What sort of strategies might be of good use in a declining market? I have thought I could buy and hold until values increase and just rent the property out. But it would make more sense to me to just wait until prices drop so I don't end up buying too high. If I were trying to flip I would be fighting the clock as the value went down over time. I am just very nervous about making a purchase right now and being unable to get rid of the property or make a profit off of it. What might be some ways I can protect myself so I don't pay a high price for simply investing at the wrong time?
@jefferey Compton you see a lot of folks say 2008-2013 was great time to buy. Now we are seeing multiple markets come back around. The problem being there is a lack of good solid inventory. Which does exist just a lot harder to find. Once word gets out that another market is good. Investors flock to the markets. Its not hard to read what is going on. I always let the market tell me what to do. Then you have to have set goals for what you want to accomplish. Then adjust with the market. Keep in mind people are buying homes every day, folks are renting homes every day. This is not going to stop any time soon. Only thing I would look out for is market corrections when and if that is happening when buying cash flow rentals. Our south eastern folks rents are slowly creeping p and we are not huge appreciation markets. So safer playing field if that's your cup of tea.
So really the question is where can you get the best numbers , to match what you want to accomplish.
Alex