Dose 3. Opportunities within every part of every cycle
Do it right in Real estate investment; wealth creation at its best
In Dose 1 &2 of this series we have gone through the importance and need to have realestate as a component or every portfolio; as well as how to stay afloat in a cyclical industry like real estate.
It’s time to look at how to harvest opportunities, not when it’s obvious neither when it is a lucky pick. Realestate investing is a science.
Let’s start again by the basics. Only invest in what you know and understand: A loss in an investment you understand is safer than a profit in one you don’t. Study the area you wish to invest in, understand community benefits and community challenges, layouts, build quality, traffic at peak, future prospects, future risks.
Shedding light on realestate market moves we see that the market is usually in one of those three stages. Prices going up, Stagnant, prices going down.
There is plenty of opportunities in every stage of market movement.
When market is gliding most investors would be searching for an entry to the market and most have their own theories which don’t have to be right, although they mostly work because they caught the market at an uptrend. This would mostly work except if you were caught immediately before the music stops or if you are buying realestate for the wrong reasons.
Some of the less obvious opportunities can be discovered when the market is stagnant. At such a stage transactions are scarce. It will take sellers more time to be able to liquidate a property. This will push property owners who need the cash to drop prices hoping to increase buyer’s appetite towards their property. Generally when property markets stagnate, some other economic turbulence is evident in other sectors which will cause more pressure on property owners. Moreover tight liquidity is one of the drivers regularly to stagnation in property markets as there is a big portion of buyers who depend on financing to attempt such a big ticket purchase. All such elements create amazing opportunities at this stage of the market.
Finally when the trend is down while many buyers would be on a wait and see mode, many others would be circling the market for the right opportunity. Let’s remember a market with prices dropping supports market clearance which leads the trend to flip around.
Enjoy having the best of each stage.
Part of the series “Do it right in Real estate investment; wealth creation at its best”
Dose 1. Real state a component of every portfolio.
Dose 2. Step buying to crunch busts and booms (Afloat in a cyclical industry)
Dose 3. Opportunities within every part of every cycle
Dose 4. What does it really mean to have a market with short and fast cycles (Liquid markets and why they are the most interesting?)
Dose 5. Have your money work for you.
By Makram H. Hani
C.E.O. Arms &McGregor International Realty®
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