| When the real estate market is booming, the | | | | investing, a down market is the best time to |
| price of property gets higher each month. Making | | | | enter. One great method for buying properties, |
| money in this type of market is easy. In fact, | | | | for someone with little working capital, is the |
| you can hardly avoid making money in a hot real | | | | age-old gem known as renting with an option to |
| estate market. Just buy property at the going | | | | buy. |
| price with, preferably, a no points mortgage, hang | | | | In a hot market, you'll never find such a deal. It's |
| on for a couple months, then put it back on the | | | | too easy for the seller to unload his house at a |
| market and ask 10 percent more than you paid | | | | large profit. But when the house won't sell, you will |
| for it. If there are no offers at first, hang on, in a | | | | find people who will do anything to get out from |
| truly hot market, you'll get your price in no time. | | | | underneath its mortgage. |
| This crude form of flipping, along with other | | | | Realistically, you will have to look around a bit to |
| popular forms of "Getting Rich in Real Estate," | | | | find someone who will rent a house to you and |
| work as long as the market allows it to work. | | | | give you an option to buy, but look hard enough |
| Buying fixer uppers, rental properties, subdividing, | | | | when the market is slow, and you'll find such a |
| even just being a common homeowner are all | | | | seller, for sure. |
| lucrative strategies in a booming real estate | | | | In some people's situation, they need to sell their |
| market. In this type of market, if you own real | | | | house before they can buy a new one. These |
| estate, you will make money. | | | | people won't be able to rent/option their houses. |
| What about when the price of realty is going | | | | However, there will be people who have moved |
| down? How can we make money in real estate | | | | to another house already and there will be people |
| then? Obviously, if someone buys a home at | | | | who have invested in a house whose price is |
| $300,000 and sells it at $200,000 he will lose | | | | falling. Many times these people will listen to offers |
| money. So, buying and selling real estate in a | | | | that may lead to their disposing of this property. |
| down market won't work. | | | | At first, people will tell you they will only rent to |
| In other types of commodities, we can short a | | | | you, but after you ask about a rent with option, |
| futures contract in order to make money when | | | | many sellers will change their minds. They will like |
| the market prices are falling. Shorting is done by | | | | the feeling of knowing for sure; the property will |
| selling something you don't own and buying it later. | | | | soon be out of their hair. Even if you make offers |
| This is done all the time in stocks and | | | | to rent/option and are denied a few times, you |
| commodities futures. When you short something | | | | will find such a deal if you keep looking. These |
| you make money when the price of the shorted | | | | deals are made all the time in slow markets. |
| commodity falls and you lose money when its | | | | A great thing about a rent/option is, it is just that, |
| price increases. | | | | an option. If you change your mind, you have the |
| Unfortunately, there is no practical way to short | | | | option of not buying the property, and if the |
| real estate because when you sell real estate, a | | | | option is good for two or three years, by then |
| deed must exchange hands. One could argue that | | | | the price of the house may have increased and |
| a contractor could sell a house and lock in a high | | | | you will have made good money as soon as you |
| price, then build the house sometime later as the | | | | exercise your option to buy! |
| price for labor and supplies are declining because | | | | Making money in a down real estate market |
| of a slowing real estate market. This, though it | | | | means knowing how to buy properties creatively. |
| might have some validity, is not the same as | | | | It also means knowing when not to buy, namely, |
| shorting the market. | | | | in a hot market. Using both cycles of the real |
| In real estate we have to learn to use the slow | | | | estate market means essentially, you will make |
| market cycles to accumulate properties and to | | | | money in a down real estate market because |
| use the hot market cycles as a time to cash in | | | | you will be accumulating property that will be |
| these properties by selling or refinancing them. | | | | worth much more in a very short time. |
| For people just starting out in real estate | | | | |