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How do I make good money in a "Bad Market"? |
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What exactly is a "bad market"? I would say that the answer has to do with your prospective on the question at hand. |
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| Author: Alan D. Kosinski |
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What exactly is a "bad market"? I would say that the answer has to do with your prospective on the question at hand. If you are a normal homebuyer and the interest rates have gone up it probably is a "bad market", since you may not qualify to buy at the higher rate, and if you can still buy the monthly payments will be higher. On the other hand as an investor the rates going up helps us show sellers that it is in their best interest to accept our creative purchase offers. Also when the rates go up it gives us an opportunity to sell our properties quicker. We will be able to hold more financing on our sales; at a higher interest rate; allowing us to make more money overall!
Home buyers will think that a "buyer’s market" is a great market, since it allows more choice and negotiation in their favor, whereas the seller will think that the same situation is a bad market since he will probably have to have the property on the market for a longer time at a reduced price. The seller will also have to give in on negotiations or risk keeping the property. This gives us as investors a great opportunity to be more creative using little or no money down techniques. We can also negotiate great positive cash flows on the properties that we may want to hold.
Housing starts are used as an economic indicator, which would suggest a strong economy or a slowing or weak economy. Most people, when they see a slow down or weakening of the housing starts statistics, tend to believe that the real estate market is not doing well. These statistics are based on the number of new privately owned homes only. In real estate if you are a builder or housing developer, a slowdown in this economic indicator is probably not good. As an investor we may be able to buy new construction properties that are not selling that the builder is "stuck with". The more houses that are already built that the builder can’t move - the better for us. This is great news to the investor who can pick up the property (sometimes for less than what the builder owes on it) then finish the construction and sell the property for great profits.
New laws are always being implemented in many areas that either directly or indirectly affect the real estate business. Income tax law, for example, may allow depreciation of investment property. At one time the building depreciation was based on a schedule of sixteen years, as compared to twenty seven and one-half years. When the sixteen year schedule was no longer allowed by the IRS, over half of the smaller real estate investors got out of the business. They couldn’t see anything positive in the situation. People like myself found positive ways to use it to create more cash flow and wealth. Others got out of the market and we acquired more properties than we could handle. What a great feeling!
Let’s take the words "bad market" out of our vocabulary. There is no "bad market" for the educated real estate investor!
If you are looking at the "bad market" - that is where you are. If you are looking at the "good market" - that is where you are. You need to make lemons into lemonade. When you hear someone say it’s a bad market, you should approach them and take the problem off their hands! Solve their negative situation by making it positive for both them and you and you’ll both win. They get rid of their "bad market problem" and you pick up your "good market wealth-builder!"
About Author
Alan is a millionaire real estate investor with over 25 years of experience. He is an author, speaker and educator specializing in creative and traditional real estate investing. To sign up to hear Alan’s next teleseminar packed with practical know-how, visit www.hearthecall.net for free access.
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