One of my favorite REI Sources is Cameron Dunlap, a serious REI in NY, who coaches many people in buying and selling houses.
I hope you enjoy his article here…..
All the best to you,
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, given, environment.
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! Buh Bye!!!
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 humanly possible.
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 your way and 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 didn’t exist.
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, and make it 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.
2. 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.
3. 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 rehab.
So, 1. Quality, 2. Terms or 3. 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.
To 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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