Real estate is not for the faint of heart—and it doesn’t matter if you’re a budding real estate investor, buyer, or seller. When the market fluctuates as much as it does, it can feel like you’re playing a game of craps, hoping for sevens and no snake-eyes!
However, there are 5 basic yet critical rules to follow when it comes to real estate, that will not only help you generate more ROI and save you more money, but also help you leverage the right time to invest, buy or sell a home.
1. Know the Market Cycle
A lot of buyers aren’t really aware of the big picture and just want to nab a home with a great deal, but the big-time investors know the current, past and future market. In other words, the first thing you need to know is that the general real estate market cycle goes on a downswing every 8 to 12 years. That right there should guide your decision on when to invest, when to buy, or when to sell.
However, at this point right now in 2018, we’re long overdue for a market correction. At the moment we’re in a slow decline all across the board since March, and that’s a good thing. As an investor, you can be poised to take some small hits but still win big, especially if you’re prepared in the long run.
Are you aware of all the fluctuations in the market right now, what’s to come, and what the best strategies are to making the most money in real estate in 2018? Request a free Gap Analysis Strategy Session with one of our investing and wealth building experts right now and discover what your biggest obstacles are and our recommended roadmap for you.
2. Location Still Matters, Even in a Declining Market
Pay close attention to the local real estate market, too. You might see on the news a lot of talk about high home prices and a major buyer’s market elsewhere, but it all doesn’t matter if more of the opportunity may or may not be near you. For instance: if you happen to live in Seattle, Washington, right now, you’ll be on fire! There is no decline at all. And that’s saying something given that even big cities like NYC are seeing a slight decline in real estate transactions.
In general, the market’s going slow right now. That’s in essence frustrating for buyers and sellers to some degree (except when buyers really do get to take advantage of the lower sale prices in many regions), but it may be an interesting opportunity for investors to bite right now and break big later down the road.
3. If You’re a New Investor Getting Into the Business, Take Note: Stick to Your System
You must be the constant in this ever-changing market, and don’t get antsy. While there are still some great properties out there with good cash flow, never break your own rules, and have a budget. Leverage that down payment as a function of your specific plan. This even applies to buyers looking for a family home. Maintain an overall guideline—no risks.
This also applies to the general mantra on how you must pick the mortgage that is right for you—not just beneficial in general. Your situation might benefit from a reverse mortgage, or a VA loan, or Fannie Mae or Freddie Mac. Who knows. It’s simply a personal decision. But do your due diligence and ask all the questions you can possibly ask to ensure you’re getting into the best possible situation.
4. Even Though You Think You Know Your Credit Score Is Important, You Don’t Know
Your credit is beyond important. It’s the basic life force of your financial well-being! Those numbers from the credit bureaus practically decide just what your interest rate will be for a mortgage, on top of what you can qualify for; so keep a close eye.
Keep in mind that the better your credit score, the more access you have to all sorts of money. It sounds enticing, and it should be. The most foundational way to maintain those high scores is to just pay your bills on time—every month. Take advantage of IRAs, too. And don’t spend more than you should according to your credit limit—and ask for credit limit increases when you can.
5. Lastly, Recognize the Regulations and the Laws
They change a lot, too, along with the market. To put that into perspective, at one point in the past market trend, everyone was only allowed a total of ten mortgages to invest in for cash flow. That’s it. What’s interesting is that the cap is now up to 20, and that’s not the first time it was that high. That means a married couple—if considering real estate investments together—can have up to 40 different cash flow properties raking in the dough consistently. So you can see the opportunity’s there.
But more importantly (and this goes back to regions and geography), the new tax laws we’re seeing may benefit you depending on what state you live in. So do your research. If you know those tax laws might actually put a damper on your goal of buying your first home or investing in 20 different properties, be balanced and focus on other endeavors until you see that market rise up to benefit you.
The good news here is that it will happen. Remember: we’re talking about the real estate market here. It always changes.
What It Boils Down To: All It Really Takes Is Just One Property
Even if you’re a first-time home buyer, if you’re getting a deal that benefits you, who knows: play your cards right, invest in your home, create value, and down the road your property may be a revenue-producer for you. This is the bread and butter of real estate investors, in fact. It just takes one home. And if you want to scale up, you make it two. Then three. Then four. Or maybe even 20.
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