Monday, December 9, 2013

Riding The Ups And Downs of the Real Estate Market - Or Not

Most investments go through a natural cyclical pattern with highs and lows.  The real estate market is no exception.  Then why do we expect it to always grow?

Well, I guess you could argue that, unlike the stock market, the real estate market is an investment in a finite and real property, whereas most stock market investments are based on future cash or value generation of that particular stock.  Alternatively, real estate investments can be thought of in the same manner - for rental properties, they provide a combination of cash generation and asset value whereas a quick flip can be quantified by the value you are bringing to the potential buyer.  Regardless, my point is that the real estate market will indeed be cyclical and real estate investors should develop plans to generate value regardless of which direction the market is moving.

Further, I am a strong believer that real estate investors need to create value in their investments not just sit on the sidelines and expect their investment to be profitable without any effort.  If you do this, along with some good decision making, you will be successful in all market conditions.

Lastly, I urge you to be a long-term real estate investor.  This doesn't mean you can't be successful with quick flip projects to generate cash.  It means stay in the market for the long-term so that you can benefit from the strong markets and weather the effects of weak ones.  Also, you will become a smarter, better real estate investor as you gain experience making each investment more profitable than the last.

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