The Real Estate Encyclopedia
How to Make a Down Market Work For You
Category - Real Estate Information Sources - Real Estate Articles

Down markets are filled with doom and gloom predictions which discourage investing. Thatís the good news. Really, it is a wonderful prospect. There is going to be less people investing in real estate now than ever before and thatís your golden ticket. Down real estate markets can be turned to your advantage very easily if you are smart about it.

You can turn a real estate investment into a long term profit. Purchase when the market is down and wait until the market rebounds. It will definitely rebound, though perhaps not to the levels that they were a year or two ago (but then again, the price levels are nowhere near the levels they were then, either). This means you purchase your real estate and treat it like a precious egg. Sit on it for a long, long time. When the market does bounce back (everyone knows it will you will be able to reap the benefits of patience.

You can try to flip the house. Particularly stressed properties or properties that are deeply devalued can be revalued if the neighborhood is still vibrant and active. If you are looking at a house and the area is looking a little down, or worse, has for sale signs everywhere, forget flipping it. You will wind up spending too much and becoming frustrated. Instead, look for neighborhoods which appear recession proof and have well maintained streets and lawns. This will tip you that a flip is possible in this neighborhood.

You can become a landlord for at least the short term. Landlords are sitting pretty right now. Almost every region in the country is feeling the pinch of an economic recession and that means people are looking for houses and apartments which will offer a simpler lifestyle. Some people have lost their homes and are looking to remain in the neighborhood, or have even moved back to a less expensive neighborhood. The lower rent they pay is like interest rates for you; a 200,000 dollar house which charges 1000 dollars a month will return 12,000 dollars in a year gross return; that is an interest rate of 6 percent. This return is much better than you will find in a volatile stock market or in a bank account where you are lucky to earn 3 percent. Once you have become a landlord, you have several options in the eventuality that the land values return to better prices and the economy picks up; you can retain your property and receive interest on your investment. You can also decide to sell your investment. In this scenario, you can not only sell at a higher value than you bought it, but you have essentially earned 6 percent interest for a number of months while you waited the financial storm out.

You need to be smart, you need to be patient, and you need to keep your money alive while this market is receding. If you can do that, you will have made quite a bit of money during a down real estate market.


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