It's no secret that the housing market has been a roller coaster ride for buyers and sellers alike. The good news is that there are ways to thrive during these times and even benefit from some unique opportunities that these times create. If you are interested in making money from real estate, then this information will be relevant for you.
Here are 5 tips to help you succeed through real estate in a down market.
1. Determine if the Market is Slowing Down.
A market that is “up” means that there are more people buying homes than selling them, which drives up prices as demand increases, while a “down” market means just the opposite—more houses are being sold than bought, driving prices down as demand decreases.
In almost all cases (there are always exceptions), when a new home goes on sale in an upmarket area, it sells within days of hitting the MLS; but when that same house goes on sale during a down market period (such as now), it can take much longer before somebody walks into its open house looking to buy!
So why does this matter? Because if your goal is making money off real estate then knowing where your local housing markets stand plays a crucial role on whether or not your strategy will work out for you.
2. Know What KIND of Property to Buy
Buying distressed property is always a good investment strategy, but this approach becomes even more important in a down market.
As institutional buyers are exiting the market and not committing to further funding, it's a great time for you to buy distressed properties at a discount. You will be competing with other retail investors, but don't let that scare you away from this opportunity—there are still plenty of deals out there!
- Look for properties that are in need of repairs.
- Look for properties with delinquent taxes.
- Look for properties with probate / title issues.
- Look for properties scheduled for foreclosure.
How to Find Properties in Pre-Foreclosure: This can be done by searching the county website's postings of property scheduled to to sold in an upcoming foreclosure auction. In Texas, county websites are required to do this.
County postings, however, may be missing information that you need to make your investment decisions; example: how much profit potential is there? What is the square footage? How many bedrooms and baths? Are there any other debts or liens that may survive you purchase at the foreclosure auction? For these reasons and others, you may consider purchasing a list from a 3rd party provider. Typically, you will pay less than $100 for a complete list for the month. If you need recommendations, let me know which county you are working and I am happy to help.
3. Leverage CONNECTIONS and Network
Look for the right people.. People like us! Besides networking and educational and financial benefits, investors can also receive mentoring and support from experienced professionals. This provides interested investors access to motivated investors who can help nurture and support newcomers.
The best decisions to make if you want to keep thriving, even if the market slows down.
It can be easy to be fooled into thinking that any self-proclaimed guru knows everything there is about buying distressed properties. However, due to the lack of third party credentialing for this type of work, it is important that you do your research and make sure that whoever you trust has can be verified by a major organization such as National REIA (National Real Estate Investors Association of Real Estate Investors) I served as president of that organization as well as the local chapter). Look for someone who specializes in buying distressed properties!
Another thing to look out for when hiring someone who specializes in buying distressed properties is whether or not they provide Live Leads! This means they will have access to all kinds of deals so they can show them directly on their website or through emails/phone calls with their prospects!
Signs you need someone who specializes in buying distressed properties
If you are a distressed property investor and looking to purchase more properties but aren't sure how, it's time to find yourself an expert.
4. Use Creative FUNDING Strategies
Have more than one way of funding these deals. If your primary source dries up and you don't have another way to finance your purchase (like an equity partner), then consider bringing in other partners or selling some of the properties if it becomes necessary.
5. Rehab RIGHT
Don't over-improve by adding unnecessary amenities like swimming pools or putting in granite countertops when they're not necessary for renting out units quickly (and therefore making money). This can really add up, especially when the market is slow and all those improvements cost much more than they did during boom times (when everyone wanted high-end finishes). Instead focus on fixing up what needs fixed without overdoing it—it'll save money down the road when renting out those units fast is most important!
I hope that you’ve found this helpful and are now ready to take on the world in a down market. It might be scary at first but remember that you have everything you need to succeed. It’s your time to thrive in a down market!
You don't have to figure everything out by yourself. We know what you need to know. It's not our first real estate cycle, you know. You can absolutely Make It Happen and we can help.
At the New Investor Experience on January 14, 2023, Linda will be sharing even more tips and helping you research LIVE leads that are on the market now. You can leave with REAL leads to pursue!
Save your seat today.