When the real estate market is in a downward trend, many real estate investors shy away from buying a home. They do not want to enter into a large financial commitment when the market is changing, or they want to buy but not before the market hits absolute bottom. However, some of the most successful real estate investors in the world made their money by buying when everyone else said to sell. While the overall market is declining, there are still countless opportunities for great returns.
A slow-moving real estate market may be the perfect time to buy. Prices are down, there is an abundance of inventory and sellers are anxious so they are willing to deal. A high number of foreclosures means real estate can sometimes be purchased for a price that is far less than it is worth. These factors can add up to the perfect buyer’s market.
Buying real estate in a slow market is not for the short-term investor whose plan is to buy a house and sell it within a year for profit. The real estate market is unlikely to make that large a turnaround in that short a time. Investors who need to sell in a short timeframe in a down market are more likely to sell at a loss.
Slow markets are great for investors willing to play the role of landlord and collect rent until the market gets going again. Slow markets usually mean a slow economy, slow job growth, and therefore a larger population of renters who cannot afford to buy a home. Your key strategy in a slow market is to buy a discounted or foreclosed home and rent out the property and collect a steady monthly income by playing landlord until the market picks up again. At that time, you could sell the property and make even more profit on the property. When you rent out the property you retain the equity for yourself while the renter pays your mortgage.
Slower markets are more conducive to better real estate deals because in so called ‘hot’ markets, it is much more difficult, if not impossible, to find a good price on a property. When the market is on fire there are a lot of bidding wars and prices go up. So, the best time to invest in rental property in order to make a profit is when the market is slow. As an investor, I find the best strategy is to buy a bargain home in a sluggish market, rent out the property for a few years while putting extra cash in my pocket every month, and then sell the home when the market is hot again.
There are many ways to make a fortune investing in real estate. For more information about real estate investing visit my website at InvestInRealEstate101.
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