Buying investment property in a Down Market
On an international scale, the real estate market has seen significant gains
in the past 5 years. Many enthusiasts have purchased housing on the way up, yet
those same investors are afraid of buying investment property when the market
goes down. Why? Unless people are looking to make an immediate profit by
flipping, then buying when the market is low and holding onto the investment
until the market rises again is among one of the best real estate investing
secrets. Hold on to a home or piece of property long enough and its likely
you’ll see gains.
A Down Market
As mentioned above, many key markets in the world have seen big realty gains,
yet these rising profits are starting to wane. Therefore, in many areas, the
market is either flat or on a downward swing. Rather than being scared off by
this inevitability, why not embrace the option to buy low? After all, isn’t the
best investing tip to buy low and sell high?
Because most of the money is made in the buy, choosing to purchase real estate
when people are more desperate to sell gives the buyer greater control.
Predicting Market Down Time
Predicting a market’s down time isn’t always as easy as it looks because ‘down
time’ can manifest itself in any market.
In a strong market, there is always a short season where the buyer will have
more control. For example, think of weather conditions or financial factors
which may impact the buyer getting more of what they want. In a hot market,
Christmas is usually a good time to buy because the weather is dreary making it
difficult for people to see the house or condo in its best light, and people are
financially strapped with the demands of the holidays making them more willing
to let go of their property.
In a down or flat market, the same predictors apply from above, but in addition,
it’s important to consider factors like seasonality in that different housing
types have varying trends depending on the season. For example, family homes
will go quickly in the spring and early summer so families can move when the
kids have school breaks. Alternatively, the condo market has less obvious
trends, however, late fall is a good time for potential buyers to negotiate
because sellers don’t want the hassle of moving around Christmas, and if they
do, they’ll usually be willing to settle on price.
In a down market, a flipper must be willing to hold on to the property until the
market rises again. Even though immediate gratification flipping seems to be the
trend as of late, professional flippers also know the value of buying low,
holding on to real estate and then selling at the right time.
Other than a strong or week market impacting long-term flips, other factors like
local development plans slated for the area, and changing demographics and
zoning also impact an area’s real estate prices.
Therefore, if you’re looking to make the best profit in house flipping or real
estate investing, be strategic about your buy; study the historical market
trends, future predictions, development plans and consider seasonality.