How To Time Your Buying and Selling Activities in the World of Real Estate

April 21, 2009 by  
Filed under Real Estate Investing

Timing is one the most important aspects of investment of any kind, but especially so in the world of real estate investing. However, there are major differences when buying and selling real estate versus stocks, bonds, commodities and futures.

Anything available for public ownership in the major markets can be bought and sold within a very short time period. You can literally sit down and buy stock one minute, and sell it the next. Real estate, on the other hand, requires patience and a considerable amount of time to purchase or sell it.

The key to making money in real estate, much like the stock market, is to sell at a higher price than what you paid for it. You may also plan on investing again when prices are lowered to achieve repeat results.

Opportunities available in real estate differ greatly from those in the stock market, as there may be too many undervalued properties to choose from or seem like there’s nothing available when you’re ready to buy. Real estate investment properties are always unique as well, presenting a different situation and hurdle with every transaction.

If you’re selling the property you reside at, you’ll have to wait for someone to buy it before you purchase your new home. Costs of entering and leaving real estate investments are also considerably higher when compared to the stock market.

No matter what the market is doing, the good news is that it is possible to still make money in real estate – much like the stock market. These changes are always cyclical and can change at a moment’s notice, but the extremes take longer to reach – allowing for plenty of time to buy up multiple properties or get out from under one.

The key to real estate investing is to remember it is a long-term vehicle in most cases. Determining what percentage or dollar amount you want to realize on a given property will force you to wait for the proper moment in the midst of a housing market cycle.

You can always purchase devalued properties such as foreclosures or bank-owned real estate due to someone defaulting on their home loan mortgage. These homes typically require considerable repair, but when purchased for a low enough price will always present a profitable transaction.

Many of these properties will sell for 25 to 35% or more below current market value, so you have instant equity. Many investors also learn to purchase common repair items such as paint in bulk to save money, and do as much of the labor as possible themselves.

Your bank may also be a good source of possible purchases; foreclosed homes represent a liability for banks, and they want to rid themselves of these as soon as possible. They would rather sell a property at a loss than continue to be responsible for taxes, insurance and maintenance. The key in all aspects, no matter what type of market you’re experiencing, is to find the best deals possible and keep expenses to the bare minimum.

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