Showing posts with label investment. Show all posts
Showing posts with label investment. Show all posts

Saturday, February 27, 2021

Monday, February 8, 2021

Why Most People Don't Get Rich In Real Estate

Initially, I intended this post to be a continuation of my prior post on how to get rich in real estate. I was going to address the barriers to entry that most people confront when attempting to begin a career in real estate and offer some suggestions on how to get around them. I am still going to address some of those barriers, but upon further reflection, I think that there is a common theme amongst most of the reasons why most people do not succeed in real estate when they wish to do so—motivation.

This may seem harsh, but please let me qualify my statement by saying that it is not easy to maintain consistent motivation. Having sufficient motivation to push through real estate losses, market downturns, bankruptcies or even years of unfruitful prospecting takes inner strength. During down times and after particularly difficult lessons in real estate, it can often feel like the experience was a sign to quit or move in a different direction. It takes true motivation, self-confidence and some self-delusion to look at a negative real estate experience, learn from the experience and continue on. This motivation is intrinsic and it only comes from a goal-driven approach to make it in a real estate. Quitting can never be an option. To that end, I want to share the following link to “The Strangest Secret” by Earl Nightingale, in the hopes that it is helpful to someone.

The Strangest Secret: Earl Nightingale

Having addressed the role of motivation, let’s take a look at the primary reasons for not succeeding in real estate and address them:

Not Enough Money, Credit, Funding

The financial barrier to entry into real estate deters most people trying to enter the market. I have written about this many times, but I have no problem reiterating that there are many ways to get started in real estate without using money or credit. I want to be clear, however—real estate investment is not the only way to make money in real estate. I definitely believe it to be the most lasting and transferable way to accumulate real estate wealth, but there are other ways to make money in real estate. Obtaining a real estate license or securing employment in as a real estate professional are both ways to begin a real estate career with little or no financial investment. A career as a loan officer, appraiser, attorney, property manger or any other real estate service professional will not only expose you to real estate markets and provide you with an invaluable real estate education, but can also lead to wealth through hard work. This wealth is bounded by the amount of hours that you can work and is not necessarily transferable, but it is feasible and requires a much smaller financial investment upfront. Moreover, the knowledge and experience gained in a real estate service career can lead to a transition to a more informed investment career.

Focusing on the real estate investment arena, there are a number of ways that you can begin with little or no money upfront. Birddogging and whole selling are both real estate investment methods that can require little to no money down. If your sphere of influence includes people with disposable income, creating a presentation and requesting investments from those that know, also takes a minimal financial investment. It may take an emotional investment to try to make such a presentation, but such experiences are part of growth. You can also save up over time, work on your credit place yourself in a position to invest in the future. Keep in mind the quote by Bill Gates: 

    “Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.”

No matter what your financial position right now, you can become a viable real estate investor with a down payment through focus and determination. If ten years seems like a long time, plan to do it in five or three. The bottom line, however, is that three, five or ten years will pass even if you don't work to improve your financial situation, it only benefits you to make sure that you do so while this time is passing.


The Market Is Bad

Markets are cyclical and we inevitably find ourselves in a down market at some point. A down market, however, is never an excuse not to start your real estate career. Although down markets may affect real estate hiring and the availability of funding, there are opportunities to invest and enter the real estate service market during any market. A down market merely signals a shift in strategy. I have written previous posts about how to navigate a real estate downturn. Please feel free to scroll through this blog and read them. As reminder, however, the lack of funding that usually takes place during a down real estate market necessitates creative financing like seller financing, buy-leasebacks (commercial real estate only), private lenders and syndications. Landlords can avoid pitfalls during these downturns by keeping reserves during times and prosperity, being very meticulous at all times with vetting tenants and by searching for ways to improve expenses and management during the lean times.

I Don’t Have the Time

This reason is a very popular one. Many people feel that they have the desire to succeed in real estate, but lack the time. For this reason, I have one question:

What occupies your time?

We certainly make time for the things that we deem essential. Many times, however, the non-essential items can inadvertently sap our time and energy. To that end, its important to be acutely aware of things that slowly leech away your time like TV, Netflix, and mobile games. It is also very important to take the time to truly self assess and make sure that you are not prioritizing items falsely labeled as essential. Committing to success in real estate will require a serious level of candor during this time of reevaluation. 

Becoming successful in real estate also will require a change in lifestyle. It is also necessary to look at which time commitments you hold perpetuate your current situation. Every lifestyle consists of habits that perpetuate it. Keep in mind that changing some of these habits may even prove to be uncomfortable, as there is a certain level of comfort in predictability. Perpetuating success in real estate will require habits that create success. The habits may seem different, strange or even uncomfortable at first, but they will become second nature over time and will bring you toward your intended goal

I Can’t Find Deals

Finding investment opportunities is certainly a large concern for new investors. It can take some time to find the first set of deals, but consistency definitely yields results. In my experience, very soon after the first few deals come in, continued consistency leads you to a point where it feels like the floodgates have opened and soon the issue becomes that there are too many deals to be serviced. That said, below are a few ways that you can find your initial deals. This is by no means an exhaustive list:

  • Check the local MLS;
  • Post “We Buy Houses” signs (where permitted);
  • Check/mail to the filings of lis pendens for foreclosures;
  • Check/mail to divorce and probate filings;
  • Attend garage sales;
  • Contact for sale buy owner properties;
  • Market to owners of vacant or high-grass properties;
  • Check the listings for foreclosure sales;
  • Sign-up for/attend tax lien sales;
  • Call/contact owners advertising for tenants;
  • Attend/join local real estate investment associations;
  • Advertise online.

I am happy to explain these strategies in more detail in the comments, if you have any questions. I also want to mention that realtors and attorneys are restricted from undertaking some of the strategies.

Real Estate Is Not For Me

Now, this is the reason that I respect the most and my answer is very simple—“Don’t waste your time with real estate.” There are many ways to build wealth and real estate investment requires a certain level of passion and motivation, as described above. Real estate should be a path to and not a distraction from wealth generation. Realizing that real estate isn’t your arena is important step to finding your true area of interest. I encourage you to seek that arena and pursuit with your whole heart. 

In the words of Kevin Garnett, “Anything is possible!” Motivation is key. The best thing that a new or seasoned real estate investor can do is to find ways to kindle and feed that spark. Regularly revisit your "Why" and remind yourself of why you are seeking to succeed in real estate. Join a group of like-minded individuals and to continue to motivate one another. Read, attend classes, continue to learn and continue to improve.

Well, that is my take on the impediments to success in real estate. Please feel free to comment below.

Wednesday, January 27, 2021

How To Get Rich In Real Estate: The Proven Method

Photo by Anete Lusina from Pexels
Welcome the first post of the New Year! A number of years ago I wanted to start a business purchasing residential mortgages in the secondary market. This was a significant time after the Great Recession of 2009 and although the smoked had cleared from that downturn, enthusiasm in the mortgage secondary market had not yet fully recovered. I knew that if I were to market my business idea, which I was positive was sound, I would have to not only formally document it in a presentation and a business plan, but would also have to show actual positive implementation results. I realized that I would have to raise a small amount of capital to implement this strategy on a small scale, so that I could present it to larger investors upon its successful completion.

In service to this idea, I spent a few weeks attending business classes and drafting a business plan in order to present the idea to potential investors. Once the business plan was complete, I brought it to the Small Business Administration to have another set of eyes on it. The plan was essentially complete and required some quick format changes to meet the SBA’s format. The changes were made quickly and the submission process was promptly completed. A few days later, the SBA gave me a final opinion on the business plan. The review wasn’t groundbreaking—it merely confirmed that the plan was complete, but the necessary next steps were Earth-shattering in their simplicity.

The SBA suggested that I seek out angel investors and pitch my idea to my sphere of influence, however, it also offered an alternative:

  •    Save up enough money to put 10% - 20% down on a house in a local    market;
  •    Purchase an undervalued or affordable property;
  •    Prepare the property for rental;
  •   Find tenants to rent the property;
  •   Use the rent to pay the mortgage and build up equity;
  •   Refinance or sell the property at the first available opportunity, using   the cash to fund your next venture.

It really is that simple…at least in theory. Believe or not, it is also very possible for most. This strategy is an expanded version of the popular BRRRR-Buy, Repair, Rent, Refinance, Repeat, strategy that is frequently discussed on the Internet and in real estate investor circles around the country. I didn’t receive it from a local investor or from a get-rich-quick website or even from a seasoned member of the real estate community trying to market a coaching program, however, but instead from the federal government. There can be no greater confirmation of the reliability of this strategy.

There it is. I’m definitely not the first to reveal this to the world and I won’t be the last, but let’s explore each step of the process more in depth:

Save Enough Money

The cost of entry is and lack of credit are the most popularly used reasons cited for not investing in real estate. According to the NAR, the National Association of Realtors, the median home price in the United States is $310,880. Admittedly, saving $63,000 can be outside of the means of most, but there are many local markets which have properties for sale for less than $200,000.  If saving $20,000 to $40,000 seems to be an untenable amount, the average cost of a new car in November of 2020 was $39,259, according to Kelley Blue Book. Assuming a poor/fair credit, causing a higher interest rate of 6%, a new car financed at 100% for the typical 5 year term, would cost $682 a month. A used car costing $20,000 with the same interest rate and no down payment would cost $387 a month. If those payments sound to high, a $17,000 car under the same circumstances would cost $329 a month. Due to the interest built into those monthly payments those hypothetical cars would be purchased at a near 16% mark-up. Interestingly, placing $333.34 a month in a savings account with 0% interest would allow a person to save over $20,000 in 5 years. If five years seems like a long time to save, please keep in mind that five years will pass whether or not you save at all. Furthermore, most people have bills that they have paid consistently for more than five years for services, cars, cell phones, etc. If necessary, a down payment can simply be thought of as another bill—your Independence bill. There are certainly quicker ways to amass a down payment—credit, borrowing from friends and family, birddogging, whole-selling, but one things is clear, the barrier to entry is not an impossible hurdle.

Purchase An Undervalued/Affordable Property

This is probably the second easiest step of this the method. I don’t want to be misleading, it certainly takes a great deal of effort to locate a property that works best for your personal situation, but this is the step during which the most support is usually offered. Finding a real estate agent with whom you can work is essential to this process. Although it is both possible and likely that the property that is chosen for investment is not found through an agent, the access to market information that  good agent has, as well as the benefit of their transaction experience can be invaluable. That said, it is important to look for a property that is at least in your price range and at best is undervalued. It is also essential to stick with an area of familiarity, if you have any. If you are a businessperson or are familiar with a certain type of industry, then commercial real estate may be your forte. In most instances, however, residential rental real estate is the easiest way to enter into the market as most people are familiar with either living as a tenant or living in residential real estate.

Although I highly recommend using a real estate agent, it is important to seek off-market properties sales, as well. Estate sales, for-sale-by-owner, speaking with local investors, tax lien sales and even memberships to local real estate investment clubs are all viable ways to find deals. REO sales are also a great way to find value, but those sales are very much on market and are always listed with an REO broker. I generally recommend not approaching a large REO broker directly as a new investor, as they typically have a long list of investors with whom they already deal and usually to whom they steer business. Anything that a new investor receives from such a broker has usually been passed by numerous times by other investors and for good reason. Establishing a relationship with small or “up-and-coming” REO broker, however, could prove to be very valuable, provided that their REO vendors are truly servicing that agent and not merely using him or her to test the market for their properties. Tax liens are also a great opportunity for investment, so long as you have time to investigate the property and a good title company and a good ESA company to ensure that there are no serious restrictions or environmental issues with the property.

  • In your search, please make sure to avoid properties with the following issues:
  • Located in an area that is unfavorable to rentals;
  • Cannot be rented;
  • Cannot be easily financed;
  • Has really high taxes;
  • Has serious repair issues;
  • Has title issues;
  • Has environmental issue. 

A good lawyer, mortgage professional and home inspector will ensure that you avoid any and all of those pitfalls. If you don’t know where to find reputable real estate professionals, an experienced realtor or real estate investor can provide you with contacts to professionals willing to assist you. Above all, it is important to maintain a balance of not rushing into a purchase, while not indefinitely sitting on the fence and never closing a deal. Although the old real estate adage—“The money is made on the buy,” is true, it is very important not to develop analysis paralysis.

Prepare The Property For Rental

Although I do not want to gloss over this step, as is it is a key step to this process, to ensure that this post doesn’t turn into a book, I will keep it short. Careful purchasing will ensure that the necessary repairs are not substantial. In order to ensure that you can handle minimal repairs, it is advisable to save an additional $5,000 to $10,000 for repairs. If this additional amount to save seems to be prohibitive, then please reduce the intended purchase price by $5,000 to $10,000.

Further, a reputable contractor is key to this step, however, there is no substitute for attentiveness. An owner’s presence during this phase of investment is key, both to show engagement and also because this is an important time for an early investor to learn more about the process of rehabilitating property.

Find Tenants To Rent The Property

If money is made on the buy, then finding tenants is where the money is secured. Tenants can be found through effective advertising and real estate agents. It may take some time to find the strategy that works best for you and the property’s market, but it is possible to create a pipeline of tenants for your rental or future rentals. It is also equally as important to vet your tenants to increase the likelihood that they will pay on time. Credit and reference checks are important to this process. You can either learn to how to perform these checks, which are not difficult to learn, or hire a vendor to do so. There are a few tricks of the trade, like never calling the current landlord of a potential tenant, as they are never honest about a bad tenant, but this can all be learned with time and research

Use The Rent To Pay The Mortgage And Build Up Equity

The beauty of owning a cash-flowing asset is that it pays for itself. Even if you were to break even with the rent after the mortgage payments is factored in, equity would still accumulate. In some instances, it may even be worth taking a loss merely to build equity, because appreciation works in tandem with equity accumulation. I would be very careful, however, not to take losses on a property in a depreciating market. That said, if you have acquired and rented correctly, this step is very passive.

Refinance Or Sell The Property At The First Available Opportunity

This is the payout. Just like the purchase, this is also a step where you will find a great deal of support. Every real estate professional loves working for a motivated seller and profit will be your motivation. Although any number of things can happen to delay a sale and marketing times may be longer than expected, depending on the market conditions, the finish line is in sight at this point. It is important to remember that all pricing should be well-informed and aggressive, if possible. It is always greater to take a hit of a few thousand on the asking or purchase price than bare the risk and cost of additional carrying charges, especially when a deal is imminent. Flexibility and creativity in closing terms and financing may also be helpful in avoiding unnecessary standoffs and allow both parties to walk away feeling like their needs were met through the transaction.

If the opportunity presents itself sooner, it might even be best to skip steps 4 and 5 and merely flip the property. That decision is entirely up to you. The most important part is that profits gained are used wisely and hopefully to buy more real estate.

Well, that’s my take on how to get rich in real estate. As I said earlier, the concept is simple, but the execution takes effort. Feel free to leave your comments below and please stay tuned for my next article—“Why Most People Don’t Get Rich In Real Estate."

Tuesday, December 29, 2020

The End of 2020: Now What?

2020 has been a life-changing year for everyone, literally everyone. From the global pandemic, to the fluctuating economy, not to mention the seismic shift in the perception of "going to work," it is safe to say that the world is different place than it was 12 months ago. Now what?

Every year Bloomberg Business Week puts out its "Bloomberg 50"--a list of 50 individuals that have made their mark during the prior year. Although this year's list contains a number of impressive men and women who were able to quickly mobilize and make moving, positive contributions during this tumultuous year, it is notable that not one member of this list was mentioned for contributions to the real estate market. In fact, there are many executives on the list that are touted for reducing the size and/or the footprint of their companies, which in many instances includes real estate divestment. Furthermore, Blackrock, a private equity that is well know for its real estate investments, has made the list, not for real estate, but for its renegotiation of national debts in South America.

The lack of presence of real estate in this list is yet another illustration of what was obvious to all real estate professionals--2020 was not the year of the major real estate transaction. As people hunkered down during to quarantine, the economy fluctuated and work-from-home became the norm, the real estate market dramatically changed. Mortgage delinquencies rose, office spaces became more available, the cost of materials trended upward and permits for new projects trended downward. Migrations from urban areas also took place en masse in March and April as those with the means and desire to seek less crowded surroundings during the spread of the pandemic did so. Although the amount and duration of this recent migration may be disputed, the effects of this exodus have noticeably shifted the dynamic in many local real estate markets, for better or for worse.

As asked earlier, "Now what?" Anyone that has paid even a little bit of attention to this blog over the years knows that I do not "do" doom and gloom. There is always opportunity in change and if there is one thing that 2020 has done well, it is that it has exposed a number of opportunities. From the rise of Special Purpose Acquisition Companies to the consideration of rezoning in urban areas, opportunities to add value, create wealth and thrive in the real estate market are going to present themselves throughout 2021. Rather than make a brief list of some of these opportunities in this post, I will attempt to explore them more in depth in posts throughout the upcoming year. 


Instead of looking back on notable movements in the real estate market during an unprecedented time, I have decided to look forward to the apparent opportunities of the upcoming year. So, please join me as The Real Estate Think Tank.com celebrates its 10th year in existence in 2021. It has been a wild ride thus far, let's conquer next year together. 

See you in 2021.

Tuesday, July 31, 2018

Change Is A Coming: How Current Economic Conditions Should Affect Real Estate Investment


Many economist and market pundits are predicting a market downturn, beginning some time in 2019 or 2020. All of the indicators of an overheated boom seem to be present--increasing margin debt, decreasing dividends, stock market price inflation and increased levels of corporate debt. Essentially, low interest rates have made credit more accessible. As a result, businesses are using credit to buy back some of their outstanding stock. In response to the relative decrease in availability of stock, stock market prices are rising, increasing household wealth across the nation. Spurred on in part by technological development, the economy seems to be booming at present, but it is important to note that mechanism that is fueling this increase in wealth is debt.

The Dangers of Debt

Although the use of debt in an economy is not an inherent cause for alarm, the financing of an economic boom through debt can lead to some undesirable outcomes. An increase in corporate debt without an accompanying increase in productivity simply means that companies are borrowing to appear more profitable, merely because money is available at low rates. Cheap money, however, has to be paid back at some point and without an increase in productivity to support the increased leverage, companies that borrow cheaply will have repay their obligations at their current rate of production with future dollars, which have less purchasing power.

Compounding this issue further is that the resulting increase in stock prices leads to an increase in the values of the portfolios of consumers throughout the nation. This increase in household wealth leads to an increase in consumer spending and borrowing. In turn, prices increase in response to the uptick in consumption. In the presence of increased productivity, such economic functionality is normally a mechanism of economic growth. Without increased production, leading to an increase in value created by this cycle of price increasing, inflation results.

Increased productivity is important to sustainable economic growth, unfortunately, it has been outpaced in the present economy by corporate and consumer consumption. The dislocation between interest rate activity and production growth is a clear indication that the monetary policy of the Federal Reserve is the true underlying cause of the economic boom. Unfortunately federal monetary policies alone cannot be the support an economic boom, as these policies will have to change once the economy show signs of overheating. Naturally, a change in the underlying support of an economic boom will cause a market crash.

What Does All of This Have to Do with Real Estate Finance?

As discussed, in a previous post, an economic downturn is the time to acquire real estate exposure, however, it is also a time during which credit is scarce. Accordingly, given the prevailing prediction of a market crash, capital acquisition should be the focus of savvy real estate investors. Therefore, now is the time to forgo acquisition in favor of increased occupancy and monetization. Given the low cost of money, now is also the perfect time to finance repairs that will facilitate higher rates and increased capitalization.

Although the argument could be made that once indicators point to a market downturn, it is already too late to begin preparation, it is better to adjust to eminent market conditions to the extent possible than not at all. The upcoming downturn, although unfortunate, can serve as an opportunity for the liquid, well-prepared real estate investor. A change is certainly on the horizon, be prepared and please feel free to provide your prospective on the matter below.

Thursday, February 23, 2017

Property Maintenance Laws and Lending


The fight against property blight is a battle that has been waged for many decades. Some areas of the nation, have struggled with abandoned properties and even abandoned neighborhoods since the shrinking of the nation’s industrial sector beginning in the 1970’s. Other areas became intimately acquainted with blight as a result of the wave of foreclosures that took place at the end of the first decade of the century. However it may have arrived, the real estate finance market is certainly now affected by the palpable concern of property blight and has had to adjust to attempts to mitigate its damaging effects. 

Why Worry About Blight?

To be clear, blight is a real issue that can lead to a number of undesirable effects. Abandoned properties that are poorly maintained cause safety issues. Poorly maintained building systems and structure will eventually fail at some point, causing unsafe buildings. Overgrown landscaping leads to health concerns. These health and safety concerns become a problem for neighboring properties, as neighbors must then focus on how to curb the spread of these issues onto their properties. More generally, well-maintained properties inspire a pride of ownership that carries over to neighboring property owners. The opposite is also true—abandoned and poorly maintained properties drain the neighborhood of pride of ownership and lead to less diligent maintenance throughout the neighborhood.

Friday, May 27, 2016

Monte Carlo Mortgages


In his book Mortgage Wars, former CFO of Fannie Mae, Timothy Howard explains how Fannie's realization that mortgages behave like bonds with embedded call options revolutionized its ability to value its portfolio and manage risk. Prior to this change in thinking, Fannie Mae's methods for reserving capital were consistently shown to be inadequate. Today, the valuation of mortgages and mortgage-related securities as bonds with embedded calls is nothing new.

A call option is a type of derivative, which conveys the right (but not the obligation) to purchase another financial instrument (the underlying asset) for a specified price (the strike price) at a specified time (the expiration date). Purchasing a call option offers the right to purchase the underlying asset and selling a call options impose the obligation of delivering the underlying asset at the strike price on the execution date.

Mortgages are freely refinanceable at any point. In this way, they function as bonds in which the payments from the homeowner serve as the coupon payment and the ability to refinance serves as a call option sold to the homeowner by the mortgage holder. Typically the refinance rates increase as interest rates decrease. Although mortgage prepayment penalties are included in mortgages to discourage refinancing, a large enough drop in interest rates can make refinancing worthwhile to a property owner in spite of the prepayment penalty. For mortgage and MBS investors, prepayments are undesirable. Given that most mortgage investors look to invest anywhere between 5 and 30 years, an early decline in interest rates can leave many investors with cash from prepayments that must be invested in a market offering lower interests rates. This undesirable situation is the double-edged sword of prepayment risk for mortgages.

Sunday, May 8, 2016

Why Historical Beta Does Not Always Work For Real Estate

Real estate investment is typically viewed as an essential part of any balanced portfolio. Its immutable characteristics, such as its relatively long pricing cycles and its above average returns, cause real estate to be seen as a stable asset. On the other hand, due to its sensitivity to interest rates, its lack of liquidity at the property level and its longer periods appreciation, exposure to the real estate can also serve as an inflationary hedge. Although real estate exposure may be purchased for any number of reasons, the risk profile of real estate assets is of interest to most, if not all, real estate investors.

The ways in which the risk profile of real estate has been expressed vary from the informal to the highly computational. On the most informal end of the spectrum, owner-operators of property frequently concern themselves with the tax consequences and appreciation of the property, content to face changes in the market or externalities, as they come. On the opposite end of the spectrum are portfolio managers and fixed-income investors, who seek quantifiable means to express the volatility of real estate securities. One such attempt at quantifying the volatility of real estate and its related securities is through the use of real estate's historical beta.

Tuesday, February 16, 2016

From Property to Liens and Back

In light of my previous post on timing the market, I thought that I would follow up with a post on one type of investment strategy that takes advantage of the cyclical nature of real estate.

There are a number of ways to invest in real estate. From property acquisition to shorting housing starts to buying equity in a REIT, each type of investment in the real estate market comes with its own idiosyncrasies, which must be understood in order to ensure maximum profitability. Specialization in one category or subcategory is often expected and praised among real estate practitioners and investors. The various entry points into real estate, however, allow for diversification. Purchasing property, notes or securitized bonds provide direct access to the real estate market, while liens, nonperforming notes and real estate derivatives can serve to counteract real estate defaults, if properly purchased. Although, given the change in the regulatory climate for derivatives, real estate derivatives have become more theoretical than piratical.

Since the real estate market has some many points of entry, one can balance a real estate portfolio by investing in different asset classes, depending on the performance of the market at any given time. In this way, an investor can capitalize on the cyclical nature of real estate. One such way to diversify is to purchase property for appreciation and purchase liens and nonperforming notes as the market declines.

Thursday, February 4, 2016

Buy Low, Sell High

I am always amazed at how the real estate market seems to demonstrate a certain level of fervor during the upswings and panic during the downturns. Although the magnitude and length of each particular cycle may vary, the cyclical nature of real estate is one of its fundamental traits.  Given the illiquidity of property, however, real estate cycles typically take place over a number of years. It has been my experience that an entire real estate cycle can last 5-10 years. Given this timeframe, there is usually sufficient opportunity to prepare to take advantage of the idiosyncrasies of each section of the real estate curve.

 The old stock market adage: "buy low, sell high" can serve as a strong guiding principal when creating a real estate strategy that will yield success throughout the real estate cycle. Almost contrite in its simplicity as it applies to equities, "buy low, sell high" is a great way to describe the recommended counter-cyclical behavior of a real estate investor. Buying low essentially means that purchases should be made in a down market and sales should be made in an up market. The challenge with counter-cyclical investment however, is that it goes against market conditions. Buying in a down market can be challenging, as that is when lenders tend to be wary of additional exposure to declining price and credit becomes scarce. It is, therefore, important to have capital available for purchases in down markets. Solid valuation is also key in a down market, as purchasing too early can result in acquiring an asset at a price point at which the asset will take a substantial amount of time to recover through appreciation. The fear of overpaying, however, should not paralyze investors into inaction, but should be seen as requiring a higher level of diligence and discipline. Opportunities are generally present in the down market, but must be scrutinized.