The Classified Real Estate Success In An Adjusting Market
Travis White Newport Beach
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One thing that makes real estate so interesting and profitable is the cyclical nature of it. There are times of boom where everything in sight explodes as cost rise into the stratosphere as everyone, it seems, just jumps in hoping to cash in on the good times while they roll.
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We have heard a lot about a coming real estate crash. The doomsayers are predicting a total collapse of real estate prices. Are they right? Anything is possible, but probably not! Too much depends on real estate.
The Hot Markets ď ˝
Red Hot Markets don't last forever. There comes a time when all "good things" come to an end. Hot real estate markets are no exception. The true professional will purchase property with an exit strategy that takes into account for the adjusting market by buying in the best locations that will enable them to more easily unload the property when the slow down arrives.
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As investment opportunities come available they start buying property in other locations that promise appreciation or profit. Many of them purchase in several areas so that they can spread their exposure and gain "safe" returns on their investments. One geographical area might be slow, or slowing, while another may be experiencing 35%, or more, annual appreciation.
The Balance of Supply and Demand ď ˝
Here's a fundamental fact I want you to remember: When the supply is high, prices go down. When the demand is high, prices go up. There were people in my investment club who believed prices would maintain it's rocket speed. The reality is, if there is too much of any type of real estate prices decline.
Put the Breaks on Speculation ď ˝
Speculation is hoping for a profit - just like when you go to a casino and hope to come out with their money. Can you do it? Sometimes, maybe. But the odds are in the favor of the house.
Equity Preservation ď ˝
Don't easily give up your equity. Protect it to the best of your ability. If you think you have to borrow from your equity pool, borrow from some of your investment properties. I have lines of credit on almost all my homes. I've never tapped into my investment portfolio, but it's there if I need it.