…includes the ability to make profitable deals on a serial basis, fairly consistently, over an extended period of time.
Many people talk themselves out of entering the real estate arena because they can’t forecast future real estate prices accurately. Worrying about buying at the very bottom of the market may not be that important. Just look at stock traders, for example. They don’t have to buy at the very bottom because they can chose to wait (perhaps very patiently) while the stock goes up over the long run. Now day traders are a nervous lot, and they are rarely able to call the bottom. All they have to be able to do is to either buy well enough to make consistent profits, regardless of the direction of the market.
You can do that, too, by purchasing options on properties, leveraging your position without obligating yourself should you make a bad call.
If the property that you anticipate acquiring cash flows, then you can afford to wait.
If the only deal that you know how to make is a quick turn deal then you merely need to have researched your target properties well enough to know what’s selling, in what value range, estimated monthly depreciation/appreciation and just figure these in when building your profit margin and business model.
If properties are depreciating at an estimated 1% per month, and fixup and resale time requires four months, then make certain that you provide this extra expense into your overall holding costs and only take deals that allow for this extra expense.
Basically, if anybody tells you that the market’s going to drop another 25%, unless they own every deal in the community, it’s only an educated opinion (or W.A.G.). Even some gal or guy with 100 rental houses can only speak from the experience of prior markets.
If you’re paying attention to the trend, the market bottom will only matter if you recognize it and run out of capital to take advantage of the long-term upswing. And, you’d be too busy making money to really worry about it that much.
What I’m also saying is that an awful lot of people will use their lack of ability to forecast a bottom as a reason or excuse to stay OUT of the market. It just doesn’t have to be that way, of course.
The “trend is your friend” and “the dip is your ship” (I just made up the latter and, while I don’t know exactly what it means, it has a nice ring to it)
