STRATEGY
MULTIFAMILY
WhyWait for a Market Downturn?
REASONS NOT TO WAIT TO INVEST IN REAL ESTATE
by Ellis Hammond
It
has been ten years now since the recent “great recession” and infamous housing market crash. Ev-
those who aren’t currently active in the market.
eryone is now out to predict the next big bust. I see many investors hiding their money into cash accounts waiting for someday in the future when the next downturn hits so they can invest. Here are three things you should know if you are looking to take advantage of the next potential housing bust. YOU NEED TO HAVE A LOT OF CASH. If your strategy is to keep cash in the bank to “buy up” the housing market, then I hope you have a lot of it! Did you know there are billion-dollar funds that were started at the beginning of the last market crash to prepare for this one? Your competition is stiff. NO. 1 YOU NEED TO HAVE EXPERIENCE. Unless you have a lot of cash then you will probably look to take out debt on the properties you wish to pur- chase. The problem with this strategy is that banks are way less likely to lend in a downturn market, especially to NO. 2
NO. 2
YOU WILL NEED A TEAM OR PROCESS
ALREADY IN PLACE. Ok, let’s just assume you have the cash needed and you have purchased a few properties in the last few years. You feel like you are ready to pounce when the market turns. Do you have a team or a process already in place that helps you find deals? Just because houses are now more affordable to buy does not mean that they get easier to find! Lots of people have been weary of the housing mar - ket for the last several years and hoping to take advan- tage of the next bust. You will not be the only one looking for a deal. There is another option… The strategy above is worth considering, but I think that most investors who wish to buy during the next down- turn will be hugely disappointed. What they are hoping to accomplish may not work out as flawlessly as they have planned.
68 | think realty magazine :: october 2020
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