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What time is the right time to invest in real estate?
Worried about the future of the current real estate market? For investors who understand what is happening, this is actually a great time to make money investing.
Real estate is cyclical and always has been. There was a large national article published that stated Las Vegas real estate had completely capped out and there was no place for it to go but down. Ironically, that article was published nearly half a century ago! Has real estate gone up in value in Las Vegas in the last 50 years? You bet, and not just a little! Now does that mean real estate is going to keep going up like it has the last fifty years? Don't plan on it, however I'll explain the benefit of this type of media coverage and how it is invaluable.
1) It creates fear that scares off a lot of people from investing (creating more opportunity).
2) It eliminates aggressive scam investments (as we saw rampant with builders in Florida and Las Vegas the last few years).
3) It makes people question the value of their properties (creating more flexible sellers).
Here is something to consider: Do you know any ultra successful real estate investor that is afraid of flat or declining house prices? Quite to the contrary, knowledgeable investors understand when markets are flat or down it just weeds out beginning investors, makes people panic and means more opportunity.
What's important to understand is just as real estate is cyclical, so are the number of buyers and sellers in a given market.
We’re not just buying properties and hoping that they will appreciate or go up in value. That’s not investing, that’s speculating! You're completely dependent on future growth that is entirely out of your control. That’s a conventional mindset and will not work in flat or declining real estate markets especially in the short term. Like any business, you need to make well calculated decisions. In real estate, that includes making creative, risk free offers and setting up your exits appropriately for the specific investing circumstances.
There are also better creative real estate strategies for down and soft markets like wholesaling, flipping/assignments, lease options, foreclosures, short sales, and "subject to" investing. However, even when doing rehabs or fixer uppers (which are not usually recommended in down markets) there are still good ways to make a good profit with the right system and proper planning, such as factoring in depreciation and extended selling possibilities.
This is why faster, lower risk, more creative real estate investing strategies like wholesaling housesare better to use during market declines. The point is market conditions should not determine whether or not you make money; it’s how you approach it and what is appropriate for the circumstances. When you structure risk free deals and make calculated decisions, the real estate market conditions will never be a determining factor of whether or not you are successful!
Don't get caught trying to invest in real estate using only one strategy. Use multiple real estate investing techniques to profit in your real estate market.
One of the best ways to do this is to use several creative real investing strategies like assignments, subject to, foreclosures, and lease options in conjunction with one another. Once you learn each of the individual strategies, you can begin to apply them in conjunction with one another to create more flexibility, larger profits while limiting your risk. Below are few examples of strategy combinations you can use in any market. There are of course many others.
In “Subject To” and Lease Options
You can gain control of a property using a subject to arrangement, then lease option the property for higher rents, more cash flow and a higher purchase price.
“Subject To” and Flipping
When you find a motivated seller you can gain control of the property using a subject to or other arrangement, then flip or assign the property to another buyer or real estate investor.
Foreclosures and Wholesaling
You can tie up a property in foreclosure by getting it under contract at a lower purchase price (and even negotiate an additional discount with a short sale) then wholesale the property to another buyer or real estate investor for a fee.
You can use a number of different strategies in conjunction with one another. For example, you may find a property that needs a lot of work, then rehab the property and lease option it for a higher purchase price and rents. The same principle can also apply to single family homes by doing lease options instead of traditional rentals. These are some additional ways to increase profits, cash flow and long term investment growth.
If you are buying and holding properties make sure you’re in a market that supports it. You will not want to hold properties that are losing value because of a market decline (unless you’re getting enough monthly cash flow to justify it). This is why faster, lower risk, strategies like wholesaling real estate are better to use for flat and down markets.
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