We have a rapidly changing real estate market in play right now. What is the best strategy for investors to take advantage of this kind of changing market?
Wow! We went from a buyers’ market to a sellers’ market in what seems like overnight. How can this happen and how do you stay ahead of the game? Once you are able to stay ahead of the rapidly changing market, you have conquered what only 3 or 4% of investors ever accomplish. Most people are so wrapped up in the individual investment that they miss looking at the big picture.
To thrive in the real estate market (especially a rapidly changing market) you must do what my wife calls S.I.B.K.I.S (See it Big, Keep it Simple). Investing is much more than just the deal; this is where most people miss the opportunity. Most just start by looking for a property that may generate a good return and then buy the one they like best. These people are looking at the small picture. Believe it or not, this part of the process comes much later. The purposeful and seasoned investors know they must look at the big picture first.
The Big Picture:
- What is your overall objective with the investment?
- Where can I get the best most sustainable returns for the investment?
- What investment vehicle will I use? Buy and hold, turnkey investing, tax deed investing, notes investing (it is imperative to pick a strategy and stick with it and not chase every opportunity that looks interesting. (Those who do this never end up investing at all) after you get good at one you can diversify to another.
- Possibly most importantly, is where are the seasoned investors investing?
You will find that the seasoned investors are often a few steps ahead of everyone else. People tend to flock together in groups. Investors, especially new investors feel there is safety in numbers, if everyone else is investing in this or in that then it must be safe for me too, right? Maybe, maybe not. We use this expression, “when the cream is skimmed off the top all you have left is the milk”. There is little value in the milk. The value is in the cream.
What I mean here is, where everyone is investing in the market you tend to have more competition. When you have more competition you have fewer profits.
Follow the seasoned investors around and see what they are up to. Where in the market are they investing, what investment vehicles they are using. Turnkey, buy and hold, tax deed, etc, etc. Seasoned investors tend to stay ahead of the masses and are capitalizing on investments before the masses catch up. This is where you want to be, at the top of the investment strategies.
As time progresses and the market changes, so too will these best strategies change. Keeping up with the changing real estate market is paramount in order to be on top. As they say, “it is lonely at the top” (less competition), so lonely can be great for the purposeful investor who is in the know.