My favorite part of being a Real Estate investor is also the scariest part. Any experienced investor will tell you that there is always a way to make a profit if you are willing to change with the market. If you can make changes just before the market does, then you’ll be ahead of the game. Change your investment strategy too late, and you could join many investors in Bankruptcy.
This is my favorite part because it means that as an investor I get to be a lifetime student and I won’t ever get bored by doing the same things repeatedly. I love being able to research and learn as I prepare myself and my clients for the next market fluctuation. For very good reason, this also scares most investors. The fear of being caught off guard by the market is a real one. You can’t always know what the market will be like next year. Therefore, a sizable portion of your profits are best used by increasing your cash reserves for the unforeseen costs or losses.
We are currently in the middle of a shifting market here in Oregon, with some looming proposed legislation that could drastically effect your way of doing business and your profit margins. Investors have been able to make fair profits over the last few years by purchasing homes, improving them, and then reselling. As these investors have seen, the low supply in the market has made it very difficult to find properties with enough upside. Without the supply of reasonably priced homes these investors are having to look at other ways to invest in real estate.
Given our strong rental market over the last few years most investors are looking at investing their money in buying or building rental units. It is very hard for me to disagree with their strategy. Within my Property Management company, IRC Real Estate, our clients are seeing solid returns on their investments. Given that this is no secret at this point you will see a lot of competition in the market if you are looking to buy rental units. This does not mean that you cannot find fairly-priced rental units to purchase. Given the high demand, investors are also seeing their properties sell for top dollar. As you can see, market changes may not trigger the same reaction from all investors. If you have investment property that you have been considering liquidating then it might be the perfect time. If you decide to sell your investment property be sure to do your research before hiring a Realtor. Within our Real Estate company (IRCEnterprises.com) we specialize in being Realtors for investors because selling investment property truly requires a different area of expertise.
The other big changes affecting our rental market is what is going on at the legislative level. Tenant rights and landlord restrictions are the hot topic. Just like I mentioned before though, the same reaction to these changes will not be right for every investor. If you own rental units in areas that will be affected, then you may want to consider liquidating these rentals and purchasing units outside of the affected jurisdictions or simply finding other areas to invest your money. Given there are a lot of investors currently selling or planning to sell because of these changes.
If you happen to be the type of investor that is not scared off by these changes or have a professional property management company., then you may look at this as a great opportunity. It may be time for you to get connected with a Realtor that specializes in investment property sales. We are already seeing investors start to list 1-5 unit properties because of the legislative climate here in Oregon, so if you don’t want to miss out now is the time to start searching for good investment opportunities.
As you can see, changes in the real estate market create opportunities for investors to earn a profit or even lose money if they don’t react in time. Riding these market waves can be fun if you stay vigilant and remember that a smart investors main job is to study and learn as much as they can, as often as possible. Also, remember that your first and the most obviously reaction to market changes may not always be your best option. The big variable that experts like myself can’t possibly know is your personal finances, interests, wants, needs, and risk level. Ultimately, you are the only person that has ALL the information possible to make the BEST decision for your personal investment strategy.
Don’t ignore your fears when facing a changing market, but also DO NOT let those fears keep you from deciding and changing with the market. If you have questions, reach out, I would be happy to help.
IRC Real Estate & Property Management