Where Should I Invest in Real Estate

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Where Should I Invest In Real Estate

By GEOFF CAPLAN
Member of the Deerfield Beach Real Estate Investments Club

Do a search on the internet for real estate investing and you will find hundreds of ways to get achieve wealth through real estate investing. But, if you are investing in real estate it is just not going to happen without the appropriate research.

Investing in real estate is one of the few methods for the average person to obtain wealth. Can you become rich overnight? Not very likely. Real estate investing should be considered a long-term strategy that can gain you a tremendous amount of wealth over time, but you must do your homework first. The majority of people that are getting into the real estate investing market are merely purchasing a home in an area that they are familiar with and then wonder why they are not rich after a couple of years.

There are three main points you must consider before purchasing your first property, and they are location, location, location. This is a rather simplistic view of real estate investing, but it has never been truer than today. Thousands of people are getting into the real estate market, and yet many of the foreclosures in the market are from non owner-occupied homes. This means that people that have purchased a vacation home or purchased a second home for investment purposes have gotten into financial trouble. This usually happens because they did not buy that asset in the correct location at the proper time. So the question is, how do you find the right place to invest?

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Any location can be the correct location to invest in real estate as long as the timing is right. There are four cycles of real estate investing, and the sequences can run from 7 to 40 years, depending on the intelligence of the local government. These cycles are Buyers Stage 1, Buyers Stage 2, Sellers Stage 1 and Sellers Stage 2.

Buyers Stage 1 – strategy buy and hold.

1. Oversupply of properties on the market.2. Prices and rents are falling.3. You will see a spike in the properties time on the market.4. Unemployment is at its highest.5. New construction is overpriced, and sales are stagnant.6. Construction jobs are at an all-time low.7. Foreclosures are at its highest rate.8. Investment properties are not being purchased or being purchased at a slow pace.

Buyers stage 1 is a declining market, and you will need to shop around for a good investment because you do not know how low the market will go. If the local government is not taking action at this point, then the market turnaround will be delayed, and more care will be needed to be made. Always purchase a new property with a lot of equity and good cash flow to help minimize your risk.

Buyers Stage 2 – strategy buy and hold – also known as the Millionaire Maker.

1. No new construction.2. Demand for housing is increasing sharply.3. Properties time on market is decreasing.4. Rents and Prices for the property are at its lowest.5. Foreclosures are starting to decline .6. Job growth is increasing.7. Rehabbers are purchasing an increasing number of properties.8. Fewer properties are getting on the market.9. Demand for properties is growing because buyers are able to qualify at the low prices.

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Buyers stage 2 only happens after the local government is starting to attract new business into the area. For every one new job brought into the city, three new jobs are created. These newly created jobs are the butchers, bakers and candlestick makers. In other words, the support jobs that are needed to service the new people in the area. I believe that the most important thing to watch for in this market is the job growth rate. New people coming into the city will require housing which will drive up the price. Your local economic adviser counsel is an excellent place to look.

Sellers Stage 1 – strategy buy and sell quickly.

1. Demand for property is increasing.2. The time on market for properties in decreasing.3. Property taxes are on the rise.4. Unemployment in reducing.

Sellers stage 1 is a perilous time to be investing in property because you do not know how long before the seller’s stage 2 will occur. Be sure you know the signs of the next phase so you can get out of the market at the best time.

Sellers Stage 2 – strategy sell, sell, sell.

1. Supply of properties has sharply increased.2. Time on market is increasing.3. Construction of new homes is rising .4. New job growth is slowing.5. New real estate investors are jumping in.6. First time home buyers are increasing.

One of the ways to watch for new construction of new homes is to check with the local building permits department. You will be able to pick up some good deal from the late first-time real estate investors that jump in during the seller’s stage 2 market. Always do your homework before investing in real estate.

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Do a search on the internet for real estate investing and you will find hundreds of ways to get achieve wealth through real estate investing.

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