The real estate market has dropped out. Prices are falling around your ears. So does this mean
that you should get out of property investing? No this is actually a great opportunity to increase
your portfolio. When you are buy real estate it does not really matter where the market is, unless
you are considering selling in the short term. If you are holding long term then you have to accept
the market fluctuations if you can buy during a low period of a cycle that is the "golden hour" in
real estate...but sometimes it is hard to find that hour on your watch.
Now that the
market is experiencing a downturn it is a great time to be buying. Just look at the foreclosure
lists. You have a massive inventory to choose from and most are at below market value. Go for
positive cash flow whenever you can. In other words make sure your rental income equals or exceeds
your outgoing including mortgage repayments. If you have other income you may be able to stand an
extra $100 or more per month to top off the mortgage but try to avoid it.
When real
estate prices where climbing we all knew that our property values also climbed. Now in a declining
market and slower home sales, investors need to be able to hold those property investments for a
longer period of time.
Focus on positive cash flow and steadily increasing returns. This
is a long term game. Property investing is a business. You need a decent return on investment and
you need the rental return to cover or nearly cover the new mortgage expense.
Having said
all that, we cannot avoid the fact that with good research and due diligence the depressed market
presents investors with the GREAT opportunities to build a portfolio of properties for long term
gains.
