News flash: Real estate is in a downturn. Prices are dropping. Does this mean that you should get out of Real Estate investing? No this is actually the BEST TIME to increase your property portfolio. When you are buy property it does not really matter whether the market is up or down unless you are trying to do a fast turn over. If you are holding for the long term then you have to deal with the market fluctuations with an inevitable upward trend at some point. If you can buy at the lower end of the cycle that is the best time to buy of course.
Now that the market is experiencing a downturn it is a great time to be buying. Just look at the foreclosure lists. You have a massive inventory to choose from and most are at below market value. Go for positive cash flow whenever you can. In other words make sure your rental income equals or exceeds your outgoing including mortgage repayments. If you have other income you may be able to stand an extra $100 or more per month to top off the mortgage but try to avoid it.
If the property market is rising you can be confident that the value of your investment is increasing. That is where your profit is and you should be able to sell if necessary. However, that was a few years ago when the market was more positive but now the reality is that the market has dropped and you need to be able to hold long term without any worries. It may take a few years before we hit healthy real estate selling conditions again, let alone a property boom.
Several investors that started during the “boom” now have to change how they are thinking about investing. This is the time when we separate “those who can from those who got lucky and made a few bucks”. Now is when the long term hold plans must start becoming the focus. This is a business. You need to do the math. Will your income from your investment cover the expenses/new mortgage?
Having said all that, there is no getting away from the fact that with good research and due diligence the down and depressed market presents serious investors with the best opportunities to build a portfolio of profitable properties for long term gains.
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