Investing in the current market
Life can be a lot like the real estate market; one minute everything’s going right, and the next, things seem to stall and sputter.
Many who invested in real estate properties during the nationwide boom (2001-2005, give or take a year for varying markets) were successful–for a time. We all heard the success stories or got to tell them from personal experience. Made 20k , 50k, or more in a year. Several of these moneymakers bought properties without an ounce of research and saw their property appreciate at an unusually rapid pace. Not surprisingly, real estate investors emerged from every corner. If so-and-so can do it, why shouldn’t I try it out? Gurus were formed, classes written, a lot of people made a lot of money.
But then things began to stall and sputter. Extreme markets must adjust because markets are efficient by nature; demand and supply had become extremely unbalanced. To compensate, areas experiencing the most rapid appreciation rates gradually began to stall. The era ended and several once-enthusiastic real estate investors found new endeavors to pursue.
So what about investing in the current market? Is investing in real estate just some trend of the past? In my opinion, (forgive my predictability) no, real estate is not a forgone investing option. Moneymaking opportunities are still available, but a lot of the luck out there is not. Simply put, rapid appreciation on a widespread scale isn’t happening in the current market.
Research must replace luck.
Normal appreciation rates are out there, anywhere from 3-7%. And, speaking on a local level, there are still rapid appreciation zones in areas with high demand. However, even if appreciation rates are conservative, you can still make money by holding that property for a longer period of time (20 years, for example). A long-term hold allows you to ride out localized dips in the market, reaping a big payday once you do sell the property. While this approach is considered archaic and a bit old school, it’s proved lucrative for many real estate investors.