Peter Gallagher, Princeton Mortgage Wholesale
That’s what I look like when I hear the words ‘market correction.'
It’s simple cause end effect. An action is taken, and a result is produced. What happens when housing prices drop? A chance for investors to stack some bills.
Like some other ambitious 20-somethings, I have a good friend who’s been toying with the idea of buying a house for the past two years. We’ve always had serious intentions in purchasing investment properties and already have (the beginnings of) plans in place regarding funding and the projects we would want to take on. This past Friday, he reached out to me via text and said, “After reading your last blog, I’m thinking buying a home right now is not a good call… haha."
Not so fast, Reece (shout out to Lee Corso)!
Last week in my blog post, I wrote how the value of properties is likely to drop in the near future and then went on to discuss why that only really matters when buying or selling a home. That’s great news for those of us looking to invest in real estate, because we’re going to be getting these homes at a discounted price.
After the market crash in 2008, it’s hard not to solely focus on the people who were forced out of their homes. And that’s where the main focus should be: the market collapse was nothing short of a tragedy for countless families across the country. But when this crisis took place, it created a new opportunity for investors to purchase properties at unimaginable discounts.
Again, as mentioned last week, if the value of property drops, statistics show rent prices generally remain steady (depending on that magic word… location). The demand for housing isn’t going anywhere, we’re getting bigger and bigger as a country and shelter is one of the basic human needs. When you consider the fact that our population is continuing to grow, we have a scenario where we can buy these properties at a discount while generating the same expecting income… that’s hot. Entrepreneurs will have a real, fresh opportunity to achieve success.
The hardest part is going to be getting the timing right. Property prices are going to drop, but how low will they drop until another real estate investor swoops in and purchases the property you’ve been doing research on for weeks? Or sometimes months? If you’re going to invest time, effort, and money, missing your window of opportunity could be gut-wrenching.
The biggest way to mitigate the risk of making a bad investment is choosing somewhere people want to live. Large cities are usually a good bet for consistent rent pricing, because more and more people are moving to big cities every day. If owning rental properties isn’t your plan and you want to do something like flipping single-family homes, you must be more diligent in selecting your location. But as homes start to sell for less and less, the potential for returns on your investment gets greater and greater.
Most of us missed the correction opportunity in 2008. Let’s not let it slip through our grasp.
So, relax, Reece. I know we’ll both be paying close attention to the state of the market, and we’ll make our move when the time is right. We missed the correction opportunity in 2008, but we won’t let this one pass us by.
Until Next Week,
Peter