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RECENT ARTICLES FROM REALTOR.ORG

TIPS FOR A SLOWER MARKET
Slower markets can offer rich opportunities for investors: real estate sellers are more open to negotiate and lower home prices — and combined with low interest rates — can help you get properties at bargain levels. Yet, some buyers are reluctant.

The market may not look perfect, This is why prices haven’t taken off yet — and why you want to get in before they do!

1. Timing is everything. Enter the market cycle early. “When it’s quiet, when the media isn’t saying ‘record levels of appreciation,’ that’s when you want to jump in,” the authors write. As billionaire oilman J. Paul Getty once said: “Buy when everyone else is selling and hold until everyone else is buying.”

2. Get financially ready. Before you buy, consider holding costs, tax implications, and cash flow potential. Many things can go wrong when buying investment properties — such as a vacant rental or a property that won’t sell. Have cash reserves (get a partner if you don’t have any) and you’ll be prepared to ride out any market cycle. Identify your risk level and what you want: For example, an investor who wants to turn a quick profit with low holding costs would want to sell their new-home property before construction is complete. On the other hand, an investor looking for a bigger return with less capital gains tax would want to hold the property until after construction is complete and keep it as a rental property for at least one year.

3. Buy and hold. In a distressed market, this can be a smart move. A buy-and-hold strategy can help give the property an opportunity to appreciate over time. Buy at the right price, though. Compare the home’s price to what homes are selling for over a reasonable time period in that community and what you expect is the lowest price the market will reach. Get in at that price. Consider lease option investments so you can rent the property to cover payments, having the property practically pay for itself each month. Also, continue to pay down the mortgage and eventually you may even have the home paid off — an ideal position for an investor!