REAL ESTATE OPPORTUNITIES.

The most successful investors I know buy when the most investors are selling and sell when the majority are looking to buy. This is called "contrarian investing" and it works more often than any other strategy I know. It doesn't matter whether you are talking about the stock market, the real estate market, or precious metals. It is virtually always preferable to go against the prevailing trend. This sounds simple but it is not nearly as simple as it sounds. The problem is you could rush out and buy when a downtrend has a long way yet to run. During the real estate crash of the late 80's some buyers bought too early and were unable to hang on until the market turned around. Many of those became foreclosure statistics along with those who bought at the top of the market. So how do you know when the downtrend is over? The short answer is you don't. The long answer is to watch the market carefully for certain signs. In the real estate market, one of the most important statistics is the demand for rental space. Sometimes real estate investors forget that it is tenants who drive the market. Buying when tenant demand is low means that you may not receive adequate income to fund property operating expenses and mortgage costs. The result is you may have to sell into a weak market to stop the negative cash flow that you will have unless tenant demand increases. How do we measure tenant demand? One of the easiest ways is to look at the vacancy rate in the market you are considering. A falling vacancy rate is a sign of a market that will improve. Another sign is the amount and cost of new construction. If there is little in the way of new inventory being produced and the cost of construction is higher than the cost you are paying for the property you are considering, this is positive since there is no way a developer can build a new property without having to charge more rents than the market will pay. These are but two overly simple strategies. There are many others. Stay tuned.