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