3 Ways to Help Investors Create Value Without Waiting on the Real Estate MarketBy Neil Walter
Many investors today wonder if they should wait for the market to fall before investing in real estate—but is this the best investment strategy?
In my opinion, waiting for the market to correct before buying is not the most strategic approach to real estate investing. Why? Because timing the market is extremely challenging. Most investors believe they can time the market, but just like the stock market, the real estate market is very difficult to predict. While there are some who made a lot of money buying in 2012 and riding the subsequent recovery and expansion, replicating this strategy consistently over time is very difficult. Some investors choose to wait for the market to drop so they can buy low in the next cycle, but many have already been waiting years longer than expected. During that time, real estate has appreciated significantly while they've stood on the sidelines. Waiting too long results in missed opportunities, regret for missing upside and an inability to reach long-term financial goals. Help investors evaluate some of the challenges with timing the market and investing after a correction in real estate prices by encouraging them to consider the following:
Highlight the Benefits of a Consistent, Long-Term Investment Strategy: Because of market timing challenges, advising clients to adapt a consistent investment plan with a long-term view is the right approach. Focus on Overlooked Properties: A concern I often hear when the market has gone up is that all the good deals are gone. It's common for new investors to feel they need to find something that hasn't come to market in order to buy. While there are opportunities with off-market deals, some of the best investments are properties that have been overlooked due to being on the market a long time. Counsel clients that updating the look and feel, making improvements and repositioning a property in the market can all make a big difference. Their investments should be based on fundamentals, not speculation. Encourage Value-Added Strategies: Updating, improving and repositioning a property are all considered value-added strategies. These are great ways to build equity by improving an asset. Let clients know that this is a strong approach to consider when investing in real estate because the investor is buying an asset that requires their individual vision and/or hard work. The investor must see something the broader market doesn't see, or have a capability that's unique. Other things to share with clients when encouraging value-added strategies include:
Neil Walter is CEO of a real estate brokerage infused with proprietary real estate technology. With nine offices between Las Vegas and Salt Lake City and more than 400 agents and staff, the firm operates a proprietary technology platform, ARTI®, publishes monthly market research and manages over 1,600 property management units for its clients. Additionally, Walter has taught at Dixie State University. |
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