I learned a precious lesson from a seasoned investor back in 2008. When the market starts changing, there is a flight to quality, and you want to own quality assets. Don’t ignore the tried and true principles that make long-term real estate valuable.
It’s evident that the market has begun to change over the last 90 days. It has gone from less of a sellers’ market to more of a buyers’ market. The days of 40 showings and ten offers, all highest and best with appraisal guarantees, the first weekend a property is listed are over.
You’ve already seen this in the stock market. Where high-flying tech stocks have been crushed, and value stocks are on the move up. You’ll see the same thing in Real Estate. As prices stabilize or even come down, people will have more choices and therefore want better quality properties to buy, rent or lease. What my wise mentor referred to as a “flight to quality.”
Now is not the time to:
- Buy a two-bed, one-bath home on a slab with no garage as a rental or flip.
- Buy a residential property next to commercial developments.
- Purchase speculative properties in bad neighborhoods.
- Buy residential properties near train tracks or main roads.
Don’t forget the first three rules in real estate: Location, location, location. In addition, now is the time to:
- Buy ranches over bungalows
- Opt for three bedrooms over two bedrooms
- Invest in good communities
- Purchase homes with a garage or basement
In the long run, these properties hold their value, are easier to rent or sell, and will cut your downside risk.
Quality always wins out in the long run. In a frenzied market, everything looks good. In a market with choices, quality homes in quality neighborhoods will always win. So buy in good locations and ensure your properties are of high quality.
If you need an asset-based loan to fund your real estate investments, get pre-approved here or give me a call at 248-385-3750