Fort Myers, FL · Member since 2016 · 9 posts · 2 votes
If the quintessential investing mantra is "buy low, sell high" what's a good investing strategy when the market is appreciating to the point of possibly being inflated. And how does that fit in with the other mantra "there's never a bad time to invest in real estate?" Here's an example - SW Florida roared with the boom (2001-06) then crashed (2007-10) and has been rebounding since then. Prices are now appreciating to the point that flippers are having their deals killed by bank appraisers who won't value the property at market value. Also foreclosure inventory has dried up. I'd love to hear from the BP community thoughts on wise investment strategy in a market such as this. What opportunities do you see in this type of situation?
I live and work in this market. In this market, investing and paying market prices hoping for appreciation is gambling. Wherever the market it, you must buy under market value. Referring to "The Millionaire Real Estate Investor" their mantra is: you make your money when you buy. Other smart investors follow that as well. If you can purchase for 20% under market, you have given yourself a cushion against an average market downturn. Sales are slowing in this market. Appreciation may be slowing as well. As far as opportunities, you have to find them and take action. There ARE deals. Don't buy for the sake of buying. Save your money, and buy when it makes sense.
I live and work in this market. In this market, investing and paying market prices hoping for appreciation is gambling. Wherever the market it, you must buy under market value. Referring to "The Millionaire Real Estate Investor" their mantra is: you make your money when you buy. Other smart investors follow that as well. If you can purchase for 20% under market, you have given yourself a cushion against an average market downturn. Sales are slowing in this market. Appreciation may be slowing as well. As far as opportunities, you have to find them and take action. There ARE deals. Don't buy for the sake of buying. Save your money, and buy when it makes sense.
San Francisco, CA · Member since 2015 · 786 posts · 717 votes
10y
In an appreciating market, make sure you plan for a market crash at all times.
1) Getting good at finding deals is always a winner.
2) If you are flipping or developing, what is your exit strategy when the market crashes? If you are using hard money, the holding costs during a crash can eat you alive.
3) Cash flow is almost always great and will save you during a crash.
4) Having cash and getting good at raising money through rule 506 private placements or having access to self-directed IRA money will give you a huge advantage during a crash.
5) Underwriting hard money and selling the notes on the mezzanine markets within 60 to 90 days gets you high returns with old the risk of holding the paper.