Why Soft Markets are Great Markets to Invest in?

Why Soft Markets are Great Markets to Invest?

Investing in real estate has changed in many markets in our country. There are still some areas in the country where homes are appreciating nicely, but not like it was just a few years ago. There were a lot of self-proclaimed real estate gurus that popped up during the boom times telling you how to make huge profits in real estate. Back then, during the up cycle, investing in real estate was so easy. You could throw money at almost any piece of real estate and be practically guaranteed to make a profit.

Investors that haven't weathered down cycles before are struggling because all they know are massively appreciating markets. All too many of those self-proclaimed gurus lost their shirts when the markets changed.

1) First, experienced real estate investors will tell you that more money is made in down markets than in up markets.

2) Second, experienced investors prefer to do the bulk of their investing in down markets.

3) Down markets produce more deals and less competition to get those deals.

The critical part in selecting your lease option candidates, in an up market or a down market, is creating win-win situations. The seller must be satisfied with the deal, you must be satisfied, and the end buyer must be satisfied. When investing in real estate, this is what makes us successful.

A motivated seller's goal is to sell their house. Eventually they need their mortgage paid off and the deed transferred out of their name. If they are willing to rent the house as well as sell it, they are telling you that having their mortgage paid each month is more important right now than actually getting the house sold. If we can find a tenant buyer for them, we are satisfying their core need of paying the mortgage each month and eventually selling the home. This is a win for the seller. Our end buyer is looking for a home to own. Their current situation prevents them from getting a mortgage immediately, but they plan on being able to get a mortgage soon. They want a home now. They don't want to wait to get their house. By allowing them to lease and then purchase the house we are meeting their core need. This gives our buyer a win.

Topics: Real Estate, Soft Market, Investment

Work cited: Wendy Patton (https://reiclub.com/articles/soft-markets-great-markets-invest-p1)

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