Buy in November Sell in Feb/March strategy
Member since 2019 · 7k+ posts · 4k+ votes
Buy in November Sell in Feb/March strategy
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Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
3ySeasonality is actually a reliable pattern you can count on, which makes it a strategy and not speculation.
I have bought most of my rental properties in Q3 and especially Q4. It started back in the wake of 2008 when foreclosures were plentiful and banks wanted to get REO's off their books in December. But also the residential market has a seasonality. It is even stronger in more northern locations where on top of the holiday season you have cold, dark winters.
In Milwaukee we have an annual swing between summer high and winter low median sold prices of 12 to 14%. Every year, as certain as there will be winter. Now this has partially to do with more nicer homes being sold in spring than fall, which impacts the median price as well, but fall is definitely a better time to buy. I have actually made a video about this phenomenon showing the data, you can watch it here.
61 Replies
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
This is not a strategy, this is speculation. It may have worked when interest rates were at 2%, unless you’re forcing appreciation, don’t do this now.
- Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
Seasonality is actually a reliable pattern you can count on, which makes it a strategy and not speculation.
I have bought most of my rental properties in Q3 and especially Q4. It started back in the wake of 2008 when foreclosures were plentiful and banks wanted to get REO's off their books in December. But also the residential market has a seasonality. It is even stronger in more northern locations where on top of the holiday season you have cold, dark winters.
In Milwaukee we have an annual swing between summer high and winter low median sold prices of 12 to 14%. Every year, as certain as there will be winter. Now this has partially to do with more nicer homes being sold in spring than fall, which impacts the median price as well, but fall is definitely a better time to buy. I have actually made a video about this phenomenon showing the data, you can watch it here.
- Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes3y
If you have money to gamble (meaning you are ok with potentially losing it), you could try it but it is certainly not investing. However, it is good information to know about your specific market. Essentially, you can "time the market" to an extent to buy or sell your investment properties when you're ready to do so vs. something like buy a specific property in Nov 2023 and sell it in Feb 2024.
- Member since 2019 · 7k+ posts · 4k+ votes3yTHat's precisely the point.
Quote from @Eliott Elias:
This is not a strategy, this is speculation. It may have worked when interest rates were at 2%, unless you’re forcing appreciation, don’t do this now.
strategy and speculation is on the same coin, based on data interest rate of 7% no longer a primary issue in many markets. LOL
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Ray Hage:
If you have money to gamble (meaning you are ok with potentially losing it), you could try it but it is certainly not investing. However, it is good information to know about your specific market. Essentially, you can "time the market" to an extent to buy or sell your investment properties when you're ready to do so vs. something like buy a specific property in Nov 2023 and sell it in Feb 2024.
yes been doing it for few times already, I don't see it as gamble as chance of winning is like 95%, better than vegas.
- Investor · Denver, CO · Member since 2023 · 161 posts · 52 votes3y
If you are looking to trade it's best to trade entities with lower transaction costs like equities, commodities, and currencies. Real estate transaction costs need to be factored in to see your real return when transacting on such short time scales.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
For those saying @Carlos Ptriawan observation and theory is Speculation, @Eliott Elias, your only correct in the way that any/every investment is a "speculation" in way one is doing it with intent to make a profit.
But as the word "Speculative Investment" is commonly used in industry terms, your wrong. What Carlos is pointing out is a PATTERN trading investment, as @Marcus Auerbach pointed out. No, mortgage rates sub 3% has ZERO applicability here, for DECADES this has been a pattern in the Real Estate market cycle, many many decades. Maybe some just don't have enough years in biz to be aware of such as of yet?
The only big disruption I can think of to this cycle was the COVID bull-run, where the market seemed to just skip the winter step-back. And still, if someone jumped in Nov., March/April had those significant gains all the same.
Keep in mind the relationship of market price and profit. In OH yes, I bet it's bonkers to think of clearing $100k profit in less then a year, because one can buy homes for $100k. He is talking about a market with prices pressing near to $1million, it's a whole lot easier to clear a $100k profit when it's a 115% return vs a 200%. This is why I don't flip anything with ARV under $300k, it's just too much "squeeze for the juice".
If you take that theory Carlos and add it with a property needing cosmetics; new paint, proper cleaning, staging, marketing, well now your taking a page out of my play-book.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Dylan Speer:
If you are looking to trade it's best to trade entities with lower transaction costs like equities, commodities, and currencies. Real estate transaction costs need to be factored in to see your real return when transacting on such short time scales.
in our market it is common to see house being listed for $600k, sold within 4 DOM with LLC cash buyer; only to be listed 6 months later for $750 with absolutely ZERO upgrade.
This is pretty much my market observation because Nov 2022 and March 2023 is like two different planets altogether.
The sold price in Nov was like -5% in Nov, but March this year every city appreciates 11%.
This pattern is quite rock solid, as flipper, I need to know when I shall acquire property too and not competing with FOMO/FTHB. Put it that way LOL.I think I understand now why there's price crash between July to Dec 2022, interest rate is actually the second factor.
- Investor · Denver, CO · Member since 2023 · 161 posts · 52 votes3y
What market is seeing home values appreciate at a 50% annualized rate?
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Dylan Speer:
What market is seeing home values appreciate at a 50% annualized rate?
bay area california, also it happened in some island in hawaii
- Investor · Raleigh, NC · Member since 2022 · 113 posts · 71 votes3y
Quote from @Carlos Ptriawan:
If real estate is a stock, it seems based on seasonality buying in winter and selling in spring is the best strategy, There's always a noticeable trend within these two seasons. I can see myself, someone purchased an SF in Livermore for $699k ; the same neighbor is selling for $800k-ish now. The house already made $100k. This month between November 2022 and March 2023, is the weirdest season ever in real estate. From one people open house to 100 people visiting the real estate, so let's say demand increased by 100; but supply depleted by 1/5 from June 2022. The intricacies between supply and demand are just amazing.
To be blunt, this is not a good way to invest in real estate.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
Quote from @Ace Kaspar:
Quote from @Carlos Ptriawan:
If real estate is a stock, it seems based on seasonality buying in winter and selling in spring is the best strategy, There's always a noticeable trend within these two seasons. I can see myself, someone purchased an SF in Livermore for $699k ; the same neighbor is selling for $800k-ish now. The house already made $100k. This month between November 2022 and March 2023, is the weirdest season ever in real estate. From one people open house to 100 people visiting the real estate, so let's say demand increased by 100; but supply depleted by 1/5 from June 2022. The intricacies between supply and demand are just amazing.
To be blunt, this is not a good way to invest in real estate.
Exactly how many Real Estate "seasons" have you been a part of pre-COVID, two? Seems a bit ignorant-arrogance to make such a statement from such limited knowledge.
I have flipped homes since 2009, been in real estate since early 90's. The seasonality cycle is a very real fact, and has been around as long as I can remember.
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesExactly if your in the flipping business its all speculation.. I know with my clients back east Mid west deep south they really like to buy from Nov 15 to feb 15. for a couple reasons one the competition is burnt out by Thanksgiving. and as stated seasonality of the industry.. Although transaction cost in the scenario presented will erode the profit quite a bit if you have to rely on MLS to sell at full retail .
Quote from @James Hamling:
For those saying @Carlos Ptriawan observation and theory is Speculation, @Eliott Elias, your only correct in the way that any/every investment is a "speculation" in way one is doing it with intent to make a profit.
But as the word "Speculative Investment" is commonly used in industry terms, your wrong. What Carlos is pointing out is a PATTERN trading investment, as @Marcus Auerbach pointed out. No, mortgage rates sub 3% has ZERO applicability here, for DECADES this has been a pattern in the Real Estate market cycle, many many decades. Maybe some just don't have enough years in biz to be aware of such as of yet?
The only big disruption I can think of to this cycle was the COVID bull-run, where the market seemed to just skip the winter step-back. And still, if someone jumped in Nov., March/April had those significant gains all the same.
Keep in mind the relationship of market price and profit. In OH yes, I bet it's bonkers to think of clearing $100k profit in less then a year, because one can buy homes for $100k. He is talking about a market with prices pressing near to $1million, it's a whole lot easier to clear a $100k profit when it's a 115% return vs a 200%. This is why I don't flip anything with ARV under $300k, it's just too much "squeeze for the juice".
If you take that theory Carlos and add it with a property needing cosmetics; new paint, proper cleaning, staging, marketing, well now your taking a page out of my play-book.
Also As Carlos pointed out Q 2 through Q 4 22 was one of those situations where certain markets and assets class's took a big pause. However still plenty of deals moving.. From our little sandbox we had a very slow Q 4 with our new builds in Oregon.. however After Feb one we have been on fire.. We held our price points and we are still making sales by putting out a superior product in our market U cant get away with average and get top dollar . Mid west and lower end rentals we fund are still moving nicely .. Alot of my clients those are now doing BRRR and keeping their inventory in the past they would pretty much flip everything.. so some small changes going on. the doom and gloom U tube pundits just keep pounding that values are going to tank in Austin and CA etc.. I am not so sure.. maybe they have but we have not seen it in our markets. - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Carlos Ptriawan
I recommend going back 30 years and measuring the data and account for the closing costs from buying and selling which would be approx 10% and see how many times you come out a winner? My guess is it would be like betting green on roulette
7e investments53 Reviews - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Chris Seveney:
@Carlos Ptriawan
I recommend going back 30 years and measuring the data and account for the closing costs from buying and selling which would be approx 10% and see how many times you come out a winner? My guess is it would be like betting green on roulette
the correct application of this would be for example , buy in Q4 2017 and sell in Q1 2019 while buying the same in Q4 2018 and sell in Q1 2020.
in the last 10 years, considering there's no closing cost, buy in winter sell in spring has 100% winning strategy.
- Member since 2019 · 7k+ posts · 4k+ votes3y
so good business plan :
buy Q4 2017 house A
buy Q4 2018 house B
rehab in Q42019 for sell Q1 2020 house A
rehab in Q42021 for sell Q2 2021 house B
[repeat]Transaction cost is actually not big problem in our area as listing agent is only 1.5%.
Stager fee is 3k-5k.
Min. house price for this to be effective, buy in zip code where average price is $900k or a mil. - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Ace Kaspar:
Quote from @Carlos Ptriawan:
If real estate is a stock, it seems based on seasonality buying in winter and selling in spring is the best strategy, There's always a noticeable trend within these two seasons. I can see myself, someone purchased an SF in Livermore for $699k ; the same neighbor is selling for $800k-ish now. The house already made $100k. This month between November 2022 and March 2023, is the weirdest season ever in real estate. From one people open house to 100 people visiting the real estate, so let's say demand increased by 100; but supply depleted by 1/5 from June 2022. The intricacies between supply and demand are just amazing.
To be blunt, this is not a good way to invest in real estate.
Me thinking the same like that before, til I make a realized capital gain of $120k in just four months.
Even my contractor is surprised.
I'm thinking more like stock trader rather than typical flipper when it comes to real estate, I examine home price appreciation extremely carefully.Just this month only I made another $120k from selling house , 120k from zillow predictable price LOL , I just time it correctly LOL
- Member since 2019 · 7k+ posts · 4k+ votes3y
My redfin agent told me 'ah your house is only worthed $800k....even my neighbour said your home only worthed 800k'.
( I said to these redfin guys ... 'ah you are just lazy trying to chase quick commision lol )
Then I strategically examine the data when and exactly at what date it should be in the MLS..... bummmmm.... just 3 DOM , sold price is near 1 mil LOL
real estate is actually the most easiest predictable future event that I've ever analyzed. It's way more predictable than even stock index. - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Ace Kaspar
To
Me it’s a clickbait post. “Real estate is most predictable”… if that was the case then people wouldn’t need to be on BP they would was rich as Warren buffet and running blackrock.
Anyone could have made $ in real estate last five - ten years, let’s see how people do the next ten.
7e investments53 Reviews - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Chris Seveney:
@Ace Kaspar
To
Me it’s a clickbait post. “Real estate is most predictable”… if that was the case then people wouldn’t need to be on BP they would was rich as Warren buffet and running blackrock.
Anyone could have made $ in real estate last five - ten years, let’s see how people do the next ten.
Google Median Listing Price per Square Feet in the United States
About your comment of 10 years: I am 100% sure 10 years from now winter would be December and in winter most people celebrate Christmast and they are not looking for houses.
People usually buying home in Feb->March becoz they want their W2 for prev. year to be completed, and applied for pre-approval in lender in January.
The seasonality has been there for 100 years LOL - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Jay Hinrichs:
Exactly if your in the flipping business its all speculation.. I know with my clients back east Mid west deep south they really like to buy from Nov 15 to feb 15. for a couple reasons one the competition is burnt out by Thanksgiving. and as stated seasonality of the industry.. Although transaction cost in the scenario presented will erode the profit quite a bit if you have to rely on MLS to sell at full retail .Quote from @James Hamling:
For those saying @Carlos Ptriawan observation and theory is Speculation, @Eliott Elias, your only correct in the way that any/every investment is a "speculation" in way one is doing it with intent to make a profit.
But as the word "Speculative Investment" is commonly used in industry terms, your wrong. What Carlos is pointing out is a PATTERN trading investment, as @Marcus Auerbach pointed out. No, mortgage rates sub 3% has ZERO applicability here, for DECADES this has been a pattern in the Real Estate market cycle, many many decades. Maybe some just don't have enough years in biz to be aware of such as of yet?
The only big disruption I can think of to this cycle was the COVID bull-run, where the market seemed to just skip the winter step-back. And still, if someone jumped in Nov., March/April had those significant gains all the same.
Keep in mind the relationship of market price and profit. In OH yes, I bet it's bonkers to think of clearing $100k profit in less then a year, because one can buy homes for $100k. He is talking about a market with prices pressing near to $1million, it's a whole lot easier to clear a $100k profit when it's a 115% return vs a 200%. This is why I don't flip anything with ARV under $300k, it's just too much "squeeze for the juice".
If you take that theory Carlos and add it with a property needing cosmetics; new paint, proper cleaning, staging, marketing, well now your taking a page out of my play-book.
Also As Carlos pointed out Q 2 through Q 4 22 was one of those situations where certain markets and assets class's took a big pause. However still plenty of deals moving.. From our little sandbox we had a very slow Q 4 with our new builds in Oregon.. however After Feb one we have been on fire.. We held our price points and we are still making sales by putting out a superior product in our market U cant get away with average and get top dollar . Mid west and lower end rentals we fund are still moving nicely .. Alot of my clients those are now doing BRRR and keeping their inventory in the past they would pretty much flip everything.. so some small changes going on. the doom and gloom U tube pundits just keep pounding that values are going to tank in Austin and CA etc.. I am not so sure.. maybe they have but we have not seen it in our markets.What I do not really understand is the phenomenon that in November 2022, there's only one visitor for an open house. In Feb 2023, there're 60-100 people attending open house. As result , in Q4 average appreciation is -3%, this month is 10%.
Truly the last three months are the strangest in term of buyer behavior, seems like nobody care about rate anymore.
- 3yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
I don't think Carlos is really recommending this as a strategy... he's more just commenting on the weirdness of seasonality.
Although I grant you the post title has the word 'strategy' in it =)
No new investor should try this strategy...
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes3y
@Carlos Ptriawan solid observation. I don't think you're saying to only hold for months?
Looking back, the bulk by far of all my purchases were in Q4.
The bulk (all of my sales actually) have been in Q2 - Q3.
Just make sure you hold for at least 366 days to enter l/t cap gain land vs ordinary income and SE taxes.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Steve Vaughan:
@Carlos Ptriawan solid observation. I don't think you're saying to only hold for months?
Looking back, the bulk by far of all my purchases were in Q4.
The bulk (all of my sales actually) have been in Q2 - Q3.
Just make sure you hold for at least 366 days to enter l/t cap gain land vs ordinary income and SE taxes.
I did a few times holding for months, just replacing windows and exterior painting, BRRRR while a tenant is living and making 120k profit in 4-5 months. But at that time, I projected the interest rate to be the same at the lowest rate for the next 12 months based on Repo chart.
I was also wondering why I was "lucky" if I purchased in December, it could be because of less buyers.
Another observation that I found is that most likely the sales drop between Q3 and Q4 2022 is due to too much supply from FOMO sellers rather than interest-rate, it is a time when supply growing in high numbers while demand is depleted.
As of Q1 2023, we are entering a rebounding market, it's just extremely predictable LOL. The real estate market is following the bond market closely.
The home price appreciation between 2019 to 2023 is the fastest appreciation ever recorded in history, faster than 2015-2019 era. Hence now we're entering peak ceiling in cap rates for commercial. Now is good time to become lender for cash flowing LOLA risk-off CD could yield 4-5%. While risk on debt investment could yield 9%. While home appreciation may be 7-11% IRR for the next decade.
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