Profiting In A Slow Housing Market
(If you have not heard the news yet, here it is…The housing market is experiencing a slowdown!! This means that sales are down and prices seem to be following suit. )
The market is saturated with for-sale signs, with no potential buyers anywhere in sight. But with every bit of bad news comes some good news, and the same can be said for the housing market.
The good news does not come for the sellers though, only the buyers. We are now entering a buyer’s market, where the purchaser has the upper hand in negotiations. There are also a variety of properties to choose from as well as prices that are slowly falling.
An article from Forbes.com, “Six ways to profit from a real estate slump,” discusses ways to take advantage of a cooling market and truly become a savvy buyer or investor.
One of the most productive ways to profit in a slumping market is a bit unconventional, and it involves trading your once-coveted “hot property” to a piece of land in a less desired area.
“If you're a committed property investor, consider exchanging a pumped-up property in a hot coastal market for a comparable place in markets that are already deflating. Such a transaction, called a 1031 exchange, is tax-free. And while these inland markets don't have the appreciation potential of the coasts, they also tend not to slide in harsh times.”
Another way is to play the vulture and snap up properties before they go into foreclosure by contacting the home owner directly. This may seem pretty cutthroat, but it is a good way to get a great deal.
“If being a vulture is too labor intensive, try buying from foreclosure sharks. They often work without brokers and sell for below-market prices. Aside from dealing with the trauma of distressed real estate, you can find bargains among ‘motivated’ sellers who aren't on the brink of default but are growing impatient.”
When you are too caught up in the affairs of others, be careful not to forget about yourself and become the vulture’s prey. Profiting in a slumping market is great, but make sure your own head stays above water.
With all of the “risky” loans that were issued during the real estate boom, many people are coming on hard times as their teeny-tiny loans begin to balloon. Make sure you are not one of them by consulting your mortgage coach as soon as possible.
If all else fails, head to Wall Street, and try to get a one up on your other home buyers and investors by playing with stocks. Just make sure you do your research.
“When real estate heads down, the big money flows into big apartment buildings. They're too huge to get bid up by individual home buyers. Corporate balance sheets are needed to carry them. Fortunately, the biggest and best apartment corporations in the country also happen to be publicly traded real estate investment trusts (REITs). So far this year, says SNL Financial, apartment REITs have delivered a total return of 16%.”
