The Market Is Changing And That’s Good!!
I’ve recently heard people tell me
that because the market is slowing
down it’s now harder to be a Real
Estate Investor. What I know for
sure is that this thinking or
assumption is absolutely, 180
I’ve been buying and selling houses
since 1993 and I’ve seen down
markets, sideways markets and
huge, up markets. I guess you could
say, in that time, I’ve pretty much
seen it all.
The Real Estate Market is like a
pendulum in aGrandfather Clock. It
never stops swinging back and forth.
To put it another way, Real Estate
runs in cycles. It’s a cyclical business.
This is why you can look at the
market at any given time and know
that IT WILL CHANGE. To presume
that it won’t is nothing but arrogant
The law of supply and demand is
always in play.
So here we are with the market
changing or the pendulum swinging.
You didn’t actually think that we
could sustain the kind of growth
we’ve seen in the last 5 or 6 years
forever did you?
You didn’t think that just by owning
property and not knowing what
you’re doing, you could go on
making a killing forever did you?
I guess the question most pertinent
to this article is… You don’t think
that just because growth has
slowed and because the blush is
off the rose that there’s no longer
the same proven opportunity in
Real Estate … DO YOU? No, of
course not. You’re much to savvy
to follow conventional wisdom.
If you did, you wouldn’t be reading
this right now. You like me are a
contrarian thinker and know that
wealth comes from chaos.
In the words of my good friend and
Mentor, “If you live by Conventional
Wisdom, you will die broke.”
There have been glaring signs that
the market was poised for a change
waiving at us for a long time now. A
few examples are rents as a ratio to
value. Rents in many areas are
lagging way behind values. That’s
reversing now. Another sign was
affordability. In most markets, the
average family could/can no longer
qualify for even an entry level home.
Then there’s speculation. When
preconstruction deals are the hottest
thing going – the end of the cycle is
near. Finally, when EVERYBODY you
know is getting in the game, even the
shoeshine guy, it’s going to change.
Change it has and in this humble
investors opinion… IT’S ABOUT TIME!
Now that it has, conventional wisdom
says it’s no longer a good business
That couldn’t be further from the truth.
Now is a great time to be in or get in
Let’s define and compare a “Seller’s
Market” and a “Buyer’s Market”.
A “Seller’s Market” is where there are
more buyers in the market than there
are sellers and they compete for too
few properties. This drives seller
confidence and prices up.
Common causes are falling interest
rates, rising demand due to consumer
sentiment, increased discretionary
income and spending, societal
movement, like to the Sun Belt and
other things that cause demand to
In a “Sellers Market”, good deals are
harder to find but they’re out there.
You just need to turn over a few more
rocks to find the Salamanders. Then
it’s easy to sell. The buyers are
lined up and bidding against each
A “Buyers Market” is where there are
more sellers and properties in the
market than there are buyers.
Therefore, the buyers have their pick
of the litter and are in demand.
Common causes are, rising interest
rates, a tightening mortgage market,
a recession and other factors that
cause demand to decline.
In a “Buyer’s Market”, where houses
sit with little activity and prices
stagnate or fall, it’s VERY easy to
get great deals. You can buy so
cheap and so often your head will
spin. It’s simple to get really good
deals because they’re everywhere.
Then… your challenge is to sell but
that’s easy too, when you know how.
I’ll address this here. This is where
conventional wisdom steps in and
will convince you that the
opportunity ends… if you let it.
What most people don’t know is that
if you are aware of the market
conditions and, you know how to play
the game, either type of market is
good. It’s just a question of knowing
how to do the business in the current,
Think about the current market.
Sales have slowed, prices have
leveled off and in some cases are
falling and what this has caused is
for many investors that have been
in the business for the last few
years to loose heart and in many
cases GET OUT!
The fact is, if you don’t know what
you’re doing, this market and what’s
likely to follow doesn’t look good at all.
If you do know what you’re doing this
market is the most exciting you’ve
seen in a good 7 or 8 years and the
best part is…the competition is leaving!
So, no matter what anyone tells you…
take it from someone who’s seen the
cycles and been to the school of hard
knocks. This is about the best time to
get in or be in the business as is
Don’t listen to the untrained
doomsayers and certainly don’t try to
convince them they are wrong. Let
them leave. Let them get out of
yours am my way.
Think of the law of supply and demand.
It ALWAYS prevails. If foreclosures
are up, houses are staying on the
market longer and in general supply
is up, that’s good.
Then consider all the untrained (I
call them $9 book pinheads) investors
that are leaving because properties
are no longer appreciating 35% per
year. Demand is down appreciation
has leveled off and that’s good.
It all equates to more GREAT deals
for you and me.
It’s important to realize that in this
environment, appreciation is all but
a fantasy that you can’t count on. I
learned this when I got in the
business in 1993, when appreciation
was a bonus if I was lucky. It was a
time when appreciation pretty much
In the absence of appreciation, we
make up for it by buying better.
Getting better deals. You know the
old saying… “You make your money
when you buy”. While it’s true that
you get your pay check when you
sell, that old saying REALLY holds
true in a Buyer’s Market. You’ve
GOT to buy right.
Ok, so now to the burning question
in your mind. How are we going to
sell? If it’s simple to find great
deals but it’s hard to sell. How are
we going to see the big bucks?
In every Buyer’s Market, you’ll need
to plan to sell in one of the following
3 tried and true ways, and you will
cash in while others are bailing out.
First is on “Quality”. Meaning you
rehab the house and the others like
it on the market, pale by comparison.
The few qualified buyers in the
market will want your house
because it’s the best one in their
price range and in the area.
Or, on “Terms”. Meaning we take
payments on the house and focus
on folks that have credit problems
and can’t go to the bank. We use a
Lease Option or Seller Financing.
Think about this. Every borrower
that loses their house to foreclosure
because their ARM adjusted them
right out of the picture is now a
potential buyer for the houses you
sell on terms.
Then there’s “Discount. Meaning
we sell the house at below market
value and beat the competition by
being cheap. This can be the case
when we’re wholesaling Junkers to
rehabbers or when we’re selling
houses that are in good shape but
don’t qualify for the “quality” angle.
An example being we take the
deed from a seller who’s house is
pretty but that we are not going to
So, Quality, Terms or Discount. Pick one.
Focus on those exit strategies and
buy according to the one that fits the
property and the deal and you’ll
ROCK this business at a time and
point where your $9 book pin head
competitors are jumping like rats
from a sinking ship.
So to summarize… DON’T listen to
conventional wisdom, it’s a trap for
the broke. DO look at today’s market
as one of the greatest opportunities
we’ve see in years. DO make sure
you buy RIGHT, there’s just no
excuse not to. It’s a Buyer’s Market!
DO be sure to decide how you’re
going to sell before you make your
offer. Then finally… DO get going.
This business is outrageously
profitable and outrageously doable,
regardless of the market conditions
at any one point in time, when… you
know what you’re doing.
So get trained and get in the game
NOW! Your timing couldn’t be better.
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