The real estate market has dropped out. Prices are falling around your ears. So does this mean that you should get out of property investing? No this is actually a great opportunity to increase your portfolio. When you are buy real estate it does not really matter where the market is, unless you are considering selling in the short term. If you are holding long term then you have to accept the market fluctuations if you can buy during a low period of a cycle that is the “golden hour” in real estate…but sometimes it is hard to find that hour on your watch.
Now that the market is experiencing a downturn it is a great time to be buying. Just look at the foreclosure lists. You have a massive inventory to choose from and most are at below market value. Go for positive cash flow whenever you can. In other words make sure your rental income equals or exceeds your outgoing including mortgage repayments. If you have other income you may be able to stand an extra $100 or more per month to top off the mortgage but try to avoid it.
Ok we all know that in a strong market, when the prices are going up, our property value also climbs. However now, in a slower and declining market you need to change your focus to hold for a longer period. We are looking at a few years before a more friendly market for investors shows up on the horizon.
Meanwhile, concentrate on positive gearing and steadily increasing returns. This is a long term game and always has been. Look at property investing from a business perspective and do the sums before you buy. You need a decent return on investment and you need the rental return to cover or nearly cover the mortgage expenditure.
Having said all that, there is no getting away from the fact that with good research and due diligence the down and depressed market presents serious investors with the best opportunities to build a portfolio of profitable properties for long term gains.
Doc Schmyz has done real estate deals all over the US and Mexico. His free website shares Real estate investing information for all over the US. Find real estate information by state
