Smart Real Estate Strategies When Waiting For A Correction
The market has been waiting for a real estate correction. What are the best strategies and moves to make when you need to make money, but aren’t sure when the dip is going to happen?
The Next Shift
Despite the media drooling over competitive housing markets and fast growing property prices, experienced investors have been warning that the distress hangover triggered by the events of last year still haven’t begun to kick in yet. Even regular individuals have been watching and shaking their heads on the sidelines as they see property prices balloon to mind blowing sums.
There are a lot of things driving this craze. There are fundamentals which may be supporting this activity and are making it more sustainable than the run up to 2008.
However, the latest round of data is already showing signs of a slow down. Robert Shiller of the Case-Shiller Index said March 2021 house prices grew at their fastest pace in 15 years. While he hasn’t forecast an immediate crash, he does predict a coming correction that will cause some pain as people watch their home values drop.
CNBC reports that home sales volume already fell by almost 3% in April 2021. That’s coupled with the Wall Street Journal’s Marketwatch observing “pending home sales sink as the housing market falls back to earth.” Pending home sales fell by 4.4% in April, and are a leading indicator of the direction of closed home sales in the months ahead.
April ought to have been a busy month with more new listings, and plenty of cash in the market as home buyers enjoy getting their big tax refund checks.
This suggests that the next correction could have already begun. Though there are also factors which could stretch out the current run for another year or two.
What To Do
Real estate wholesaling is the obvious play here. It allows you to get in, out and paid fast.
Though how you do it can make a huge difference in how much you can make, versus setting yourself up for financial disaster.
Fully leverage acquisitions: Keep cash to market for volume, maximize sales prices, and maintain emergency funds and liquidity.
Sell first and fill the orders: This strategy is often called reverse wholesaling.
Use back to back closings: So you don’t get caught holding the hot potato.
Buy low: Build in a cushion for change. Though don't sit on sidelines when properties are going up in price daily, and some are doing instant flips at market value.