Investment Strategies for a Slow Market
Different times call for different strategies. You will never find a boxer that only throws one punch or a doctor that only knows one procedure. In order to make more money in all seasons of your life, it pays to become a well-rounded investor.
This doesn’t mean growing a beer belly and carpenter’s crack. It means having different market strategies ready to use when the time is right, and not trying to force an ineffective strategy to work when the time is wrong.
In declining or slow real estate markets, here’s the golden rule. Hold it, Wholesale it, or Sell it Dirt Cheap.
Slow Market Strategy #1: Buy and Hold
In these markets, you often can’t sell a house for full market value if you wanted to. So why fight it? Buy with the intention of renting them and riding out the storm until values go up again. This also beats being afraid to invest and doing nothing for the next 4-7 years.
Slow Market Strategy #2: Wholesale It
And, those houses that you can get a deal on but don’t want to keep as a rental? Get them under contract and sell your agreement to another investor, who will end up buying it and paying you’re an assignment fee for finding it.
Slow Market Strategy #3: Sell it Dirt Cheap
Believe it or not, houses still sell, even in the worst of markets. This is only a problem if you are unable to lower your price without taking a loss.
The solution, then, is to buy houses so cheap (like 50-60% of market value) that you can sell them at prices higher than you paid, but are still really low (like 70-80% of market value). And don’t start out high and lower it over time, as values might go down another 5% in the next month or two. I repeat, don’t mess around now. List them with the intention of selling them really low right off the bat.
It has been a real learning experience adapting to a changing real estate market. I had to learn how to get long-term financing to hold properties, and you might have to make other adjustments. But I promise you it is worth your time and effort to do so, in order to maximize your profits and minimize your risk.