Originally Posted By John Dessauer on April 10, 2016
Slow market conditions can be scary times when it comes to real estate. Market cycles always change. I wrote about that in my first book Real Estate H2O(Chapter 8 Market Cycles; The Fish Story). The general populace doesn’t tend to buy or sell their property and banks aren’t very interested in making real estate loans.
When the economy takes a sharp downturn, it can be feast or famine for the real estate investor. The pros of the situation include less competition and not as many multiple offers for a property. There are more foreclosures, lower-priced real estate, and a larger scope for bargaining.
On the negative side, financial institutions tighten their belts and it is harder to obtain a loan on real estate, especially for rental property or other real estate investments that aren’t the buyer’s primary residence. That is why it is important to learn how to buy real estate without having to get a new loan. Leaner times bring layoffs and bankruptcies, which can mean less qualified renters. It is harder in slow economic times to sell a flipped house or other investment property, much less make a good profit. Also, prices may depreciate and go down below market value very quickly in such a market.
It is more important than ever to have the reputation as a real estate expert during a slow market. Your clients and potential clients will look to you for advice and a solution to their real estate problems.
During economically troubled times, it is a good idea to focus as much as possible on a niche market. Choose one where you have the most expertise and knowledge. No matter how bad the real estate market may appear, there will always be opportunities for the astute property investor with a strong drive for success to discover great investment possibilities. In a smaller and more concentrated market it will be much easier for you to find these opportunities, than if your efforts were spread over a larger range.
Personal motivation will play a large part in the long-term survival of your career as a property investor, especially during an extended recession in the market. The biggest factor in staying motivated is not to focus on fearful thoughts. If you constantly entertain thoughts of failure or go over the worst case scenario in your mind, you will paralyze your success. Focusing on the downturn in the economy will rob the time you could spend on creating new creative strategies and new marketing angles for your property investment career.
Don’t listen to the news with all the stories of how bad the economy is doing and how badly the real estate market is suffering. Instead, spend the time listening to encouraging motivational speakers, or in the company of successful, enthusiastic people. Reading an uplifting, inspiring book will also help raise your spirits and keep your level of motivation high.
Of course, it is always a sound idea to plan ahead financially for the possibility of a market downturn. During good economic times always try and save as much money as possible to build a cash reserve for leaner times. Concentrate on becoming financially sound so you will be able to take advantage of any good property investment opportunities that can happen during a slow market. Then you will actually prosper during an economic downturn.
“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you make it!” – John Dessauer