Did you Start Investing in the Last 5 Years?

[Michael Zuber]

To all my investing friends and colleagues that began Wholesaling, Flipping or Buy and Hold investing in the last 5 Years this post is for you.

Please reach out to all the great resources on BiggerPockets that have been in the game for 10+ years as changing market cycles can have negative consequences if you are not careful. Let me try and explain with real examples.

Flipper: Over the last 5 years Flipping Houses in a market with low supply and low interest rates was pretty easy as "Hold Time" was actually your friend.  How many times did a 30 Delay actually help you?  Maybe you got 10K more by holding those extra 30 days.  Well in a market with less interested buyers, more supply, buyer expectations for price cuts, and higher interest rates your hold time could cost you on selling price and increase your holding cost.  The dangerous double whammy.   In my market today I have been watching 5 flips that would have sold in days this summer just linger on the market.  3 have had price drops already and as everyday ticks by we get closer to the least active season (Nov-Dec) and I am wondering how many of these won't sell until next year.

Wholesalers: First I am not a wholesaler but I buy from Wholesalers all the time and I am amazed at what they do.  In a changing market I suspect they might be wise to change their marketing program as what worked before probably won't work in the future for a couple of reasons.  First and foremost lots of "Guru's" are training new want-a-be wholesalers to send out Marketing cards to out of town owners.  I went from getting 3 a week to getting 15-20 a week so I suspect that system is going to play itself out quickly.  Second the marketing or overhead some of these firms have is impressive with 10K-50K marketing spends but if the market changes and their end buyers can't sell past flips then what?  

Buy and Hold: First off these are my people as I have proudly been a buy and hold guy for 15 years.  As long as you never buy or create a negative cash flow property you have the luxury of holding on during the storm or the changing market.  However, that is boring instead I propose you do what I did the last time and you focus on getting greedy and cheap as I purchased my best investments the last time the Sellers market exploded into a buyers market.  This could go on for 2+ years so no rush but start your shopping list and look for those motivated sellers as they might be hiding today but trust me 6 months of having an empty house will cause a lot of motivation.  So do not sit back and wait but instead add some solid deals to your portfolio.

In the end I think it is clear the market is shifting, rates are going higher and we are entering the slow part of the year for transactions so if all you have known is the last 5 years is a Sellers Market, please reach out to all the great people on this site as it could really save you some pain

Good Investing

Z