[advocacy-discuss] United Built Homes, 5 Secrets for Surviving a Real Estate Market Downturn

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United Built Homes, 5 Secrets for Surviving a Real Estate Market Downturn

History repeatedly serves to show us that the real estate market is
cyclical. It has boom times and stagnant times, occasionally it suffers a
crash but real estate never becomes worthless, therefore if the experts are
right and we're about to suffer a slow to stagnant period in the real estate
market, all is not lost!

There are 5 fundamental secrets that real estate investors like to keep
close to their chest and they are the secrets that enable them to survive
and even profit during a bear market.

This article blows the lid off the secret world of the professional real
estate investor!

*1) Aligning For Profit in a Bear Market*

When professional property investors believe the market is entering a
downward phase i.e., changing from Bull to Bear - they will change their
investment strategies accordingly. One method that tough investors apply is
to buy up property in the best areas that they can afford once a market is
slumping already. Professional real estate investors know that the best
areas for property always boom again very early on in the next property
cycle.

By working in this way they can then leverage their investment by selling
their property early on in the boom cycle and buying elsewhere and always
remaining one step ahead of less professional investors or average home
owners.

Up and coming areas will eventually peak as well of course as they are swept
along on the tide of the boom, but they will not peak first and investors in
these areas will have to wait longer to see their profits.

Professional investors will likely enter these areas just before they peak
and sell up just before the heat goes out of the market enabling them to
again buy up what they can afford in the best areas thus positioning
themselves ready for the next upward trend. And so it continues!

*2) Slow Down Your Speculating*

You may already have decided that the time is no longer right to be over
extending yourself and you may have cut back on your property purchases, but
remember that making any home improvement or taking on any renovation
projects during a downward period of the property market is also considered
to be speculating. Don't just assume that capital appreciation from your
property will justify home related expenditure right now... in a bear market
it won't.

*3) Never Forget The Supply and Demand Theory*

Property prices don't go up infinitely, if you examine the ebb and flow of
the market in the US over the past decades for example, you will see that
stand alone investment in real estate would've returned you gains of just
over 1 percentage point above inflation! There comes a point in every market
cycle when the market runs out of investors willing to buy up at the top
prices and there comes a point when first time buyers are frozen out of the
market. As demand dries up, over supply brings down prices and this stops
the entire market in its tracks. If you remember this fundamental fact and
examine the movement of the market closely and carefully you will be able to
see when supply is about to outstrip demand, you will be able to watch first
time buyers reigniting the market, you will understand when the time is
right to sell and when the time is right to buy.

*4) Balance Real Estate Exposure*

You may assume that your only exposure to the property market is what you
physically hold in the way of real estate assets – but don't forget all your
paper investments as well. Do you have money invested in REITs, do you have
funds that invest in commercial property as part of the underlying
portfolio, what about your retirement fund, which market sectors are the
find managers investing in on your behalf right now? Don't assume that fund
managers will make the right decisions at the right time on your behalf, you
might be able to see the heat going out of the market quicker than they can
react. If this happens you have to be prepared to rebalance your entire
portfolio and move your exposure away from real estate if you believe the
market is about to dip.

*5) Protect Your Equity*

There is nothing more valuable than the equity you own in your own home. Do
not put that at risk. It is very tempting in a boom market to re-mortgage
yourself back up to the new greater value of your home, but in so doing you
expose yourself, your family, your home and your future to unnecessary
levels of risk. Secure the roof over your own head first and foremost, and
only then proceed into the greater real estate market with care! Do not be
tempted to secure any extra loans or mortgages on your family home.
Professional and wise real estate investors worth their salt will always
secure their own position first and foremost.
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