Making Money in a Down Market With Real Estate Investing

If you’re just now getting your real estate investing career started, you’re entering the game during an exciting time. There are unique and lucrative money-making opportunities, but there are also distinct challenges for you to overcome. The good news is that these challenges can be overcome by using your head and following solid investing principles.

It’s no secret that the credit markets have dried up, so if your credit score is low you’ll face additional challenges. However, if you’re not married to the idea of using institutional financing for every deal, motivated sellers are more willing than ever before to consider creative financing solutions. Nobody wants the credit report damage that can come from a foreclosure, so this can put you in the driver’s seat when negotiating with desperate homeowners.

The key to putting together winning investment deals in a down market is making sure that you can still make money regardless of what the market does. There are three basic concepts you need to know and understand in order to fully capitalize on everything the current market makes available to you:

  • Make Money When You Buy
    The best time to make money on a real estate investment is when you buy it. Right now, the opportunity is unparalleled because so many homeowners are facing the possibility of foreclosure and possible job loss. When you factor in the lack of available credit to buyers, this is a golden opportunity for bargain properties. Whatever you do, don’t pay retail on any property. Whether the property you’re considering needs repairs or not, don’t pay more than 60%-65% of its after repair value. This way, you have an asset with instant equity.
  • Make Money While You Hold
    A solid cash flow analysis is critical to your success during uncertain times. You can’t know with any degree of certainty whether we’ve reached the absolute bottom of the real estate market. By crunching numbers and knowing exactly how much spendable income you’ll have each month before you pull the trigger on a real estate investment guarantees that you won’t have to dip into your pocket each month just to break even.
  • Make Money When You Sell
    The market will eventually scrape the bottom and prices will begin heading back up. As prices rise, you’ll have monthly income from your property, but you’ll also be able to count on additional equity that will come to you along the way. Prices fell fast and hard. When they go back up you can ride the wave towards the top and sell when you decide to cash in on your profits.

By taking this three-pronged approach to investing in a down market, you have multiple ways of making money and you’ll never feel as if your neck is on the line. What will you do if your property doesn’t make as much as you had hoped, you have a personal crisis that causes you to want to make a hasty exit from real estate investing, or you need to sell quickly for some other reason? By buying at the right price on the front end, you have a built-in exit strategy regardless of what happens.

These are uncertain and exciting times to be playing the real estate investing game. By using your head and utilizing solid real estate investing principles, you can guarantee your success and prevent the kinds of losses that have so many people too scared to seek a better future.

Now is the time to secure your future and the financial rewards that come from making smart investments. You can stay on the sidelines and play it safe or you can push forward and capitalize on the opportunity available to you today!

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