Purchasing Investment Real Estate 101

CHAPTER FOUR:

Market conditions

 

Is it the right time to invest?  Are you in a RISING MARKET, FALLING MARKET, or A FLIP MARKET?  Are you a long-term investor, looking for a quick profit or a little of both.  When is the right time to invest?  These are just a few of the questions you must answer for yourself with the guidance, expertise, and assistance of other professionals.  However, the final decision is yours.

 

A RISING MARKET: Probably the easiest time to invest, as you can do no wrong.  Whatever you purchase your investment at; it will continue to increase from month to month and year to year.  Knowing when to sell in this market is the key to potential thousands in profit.  Remember; before a rising market begins, you have had a dramatic Falling Market.  When should you get back in?  Are you a contrarian?  What kind of market do you think we are in right now?

 

A FALLING MARKET:  Riding the wave down!  I hope that you are sitting with positive cash flow properties and have no problems with renters.  This is the time to start building your cash reserves and watching for "cash flow" properties.  Be ready to jump back into this market toward the bottom and wait for the markets next upswing.  How do you know when the market has bottomed?  When everyone is gone from the neighborhood, when you see more for sale signs on windows than not, when everyone is telling you that it is a bad idea to invest in real estate, then its time.  However, remember you want "cash flow" properties that you have no difficulty renting for a long period and that you can put money into your pocket each month.  I am talking about $300+ more a month in my farm area.

 

A FLIP MARKET: Riskier than the other two because you are playing a game with your purchase.  You are betting that you can purchase a home for so much less than it should be selling for that you will make a profit.  That profit potential has to account for sales costs, fix-up and repair costs, holding charges, and sales costs.  You best be prepared and knowledgeable about what you are doing and have good estimates and timelines.  If you have the system down, vendors and contractors in place and are able to turn your purchase around in only a few weeks, you have the potential of making thousands of dollars on each flip.