Real Estate Investment in a Recession

When the real estate market is up, buyers flock like buzzards around a carcass, but when prices are affordable, the buzzards have flown the coup. What it means is the buy low and sell high method of investment fell apart when the real estate bubble burst. New comers to the real estate market are walking on pins and needles while seasoned veterans are moving in for the kill. The veterans knew the bottom would fallout and also knew it would not last forever. So, while those who have lost their money are trying to stock pile again to reinvest, the veterans are taking the money the have sat on for this trouble time and are slowly starting to invest in properties that will be lucrative investment property. The turnaround in the real estate market has been small, but dynamic.
The NAR (National Association of Realtors) reported that residential home sales have increased by 1.5% in an economy that is the worst since the Great Depression. Compared to the crash that hit the housing market, this small increase is significant to indicate that there is some recovery going on and it will just grow stronger one step at a time. The experienced investors know this and have waited in the back for the right time to swarm the market to pick up on houses for sale. The buying presence of the seasoned buyers means that there are reliable indications that demand will once again catch up to supply.
How do you figure out that the market has hit bottom and when exactly are you supposed to buy are questions many have. Do the seasoned veterans just throw caution out the window and simply force themselves to buy properties despite the fact values may continue sliding down the pipe in the future? The veterans know better. The do not purchase property with the expectations of an immediate appreciation value. They know they will have to hold that property for a period of time. Investment real estate is purchased based on the potential for positive cash flow.
Let’s define what we mean by positive cash flow. This is when the rental property income exceeds the cost to maintain the property. When properties return a positive cash flow, the owners don’t care about a decline in the market. The money that is coming in steadily offsets any of the money the market may have generated. The owner can wait until the market revives and then sell at a profit.
Regardless of what the year holds in store for real estate investing, it is fundamental to keep in mind that investing in real estate must always be deemed over a long term. Even though the prospect for a fast turn over may present itself, the characteristic advantage to sound real estate investments is the ability to supply revenue no matter what the economy throws your way.

See also  Arizona Real Estate Investors Can Really Thrive In A Down Economy