There have always been homeowners in this country, and there have always been renters. This isn’t going to change, and the other interested real estate party is the investor. They’ve been around since the beginning as well and always will be. Why would this be? It’s simply because real estate has proven over time to be a lucrative and relatively safe investment strategy. Done properly, it’s safer than the stock market, and much more profitable than the perceived safe bond market.
Investing in real estate isn’t all about single family homes or apartments either. Commercial real estate, you know those shopping centers and office plazas, has been a retirement income wealth builder for many very prosperous retirees. Many of these commercial investors started their real estate investing in the residential niche, grew their portfolios and profits, and then transitioned to the commercial market. Now that we’ve provided an overview of the two major focuses for real estate investment, let’s talk about why there’s never been a market period when one or both of these niches was not profitable and a good investment strategy.
You may have read about or seen on the news that some investors crashed right along with the market and mortgage crash from around 2007 through 2010. That’s true, but it wasn’t because investing was wrong for that time. It was because they chose a risky investment strategy for the market at that time and over-leveraged their portfolios. This brings us to the focus of this article: knowing the various strategies and niche markets available to the real estate investor provides opportunity to profit in any market. Whether it’s a rising, falling or stagnant market, there are profits to be made safely in real estate.
Rising Markets: These are market periods with rising home prices and in many cases rising rents. The rising rents attract long term rental property investors, and they become customers for property “flipper” investors. These investors can locate bargain deals, rehab or renovate homes, and flip them to either a retail buyer or a rental investor. The rental investor can enjoy properties that are rising in value, as well as all of the cash flow advantages of rental property ownership.
Falling Price Markets: In these markets it becomes more difficult for flipping profits, but falling prices can create great opportunity for rental investors to pick up choice properties in neighborhoods that are in demand by renters. They can buy at reduced prices, sometimes cutting great deals with distressed homeowners who can’t sell on the retail market and cover their mortgage and selling costs.
Stagnant Markets: Prices in these markets are static, or they’re rising very slowly. Flippers can still make money though, as they can use proven strategies to locate super bargains and buy below market value, then flip to rental investors. Throughout all of these markets, the renters will always be with us, so the long term investor can locate good rental value and not worry about fast appreciation because they’re enjoying positive cash flow and tax advantages. None of this is rocket science, but successful investors are able to profit in any market situation because they’ve learned specific strategies for that type of market.
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