Dose 3. Opportunities
within every part of every cycle
Do it right in Real estate
investment; wealth creation at its best
In Dose 1 &2 of this
series we have gone through the importance and need to have realestate as a
component or every portfolio; as well as how to stay afloat in a cyclical
industry like real estate.
It’s time to look at how
to harvest opportunities, not when it’s obvious neither when it is a lucky
pick. Realestate investing is a science.
Let’s start again by the
basics. Only invest in what you know and understand: A loss in an investment
you understand is safer than a profit in one you don’t. Study the area you wish
to invest in, understand community benefits and community challenges, layouts,
build quality, traffic at peak, future prospects, future risks.
Shedding light on
realestate market moves we see that the market is usually in one of those three
stages. Prices going up, Stagnant, prices going down.
There is plenty of
opportunities in every stage of market movement.
When market is gliding
most investors would be searching for an entry to the market and most have
their own theories which don’t have to be right, although they mostly work
because they caught the market at an uptrend. This would mostly work except if
you were caught immediately before the music stops or if you are buying realestate
for the wrong reasons.
Some of the less obvious
opportunities can be discovered when the market is stagnant. At such a stage
transactions are scarce. It will take sellers more time to be able to liquidate
a property. This will push property owners who need the cash to drop prices
hoping to increase buyer’s appetite towards their property. Generally when
property markets stagnate, some other economic turbulence is evident in other
sectors which will cause more pressure on property owners. Moreover tight
liquidity is one of the drivers regularly to stagnation in property markets as
there is a big portion of buyers who depend on financing to attempt such a big
ticket purchase. All such elements create amazing opportunities at this stage
of the market.
Finally when the trend is
down while many buyers would be on a wait and see mode, many others would be
circling the market for the right opportunity. Let’s remember a market with
prices dropping supports market clearance which leads the trend to flip around.
Enjoy having the best of
each stage.
Part of the series
"Do it right in Real estate investment; wealth creation at its best"
Dose 1. Real state a
component of every portfolio.
Dose 2. Step buying to
crunch busts and booms (Afloat in a cyclical industry)
Dose 3. Opportunities
within every part of every cycle
Dose 4. What does it
really mean to have a market with short and fast cycles (Liquid markets and why
they are the most interesting?)
Dose 5. Have your money
work for you.
Series by Makram Hani ©
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