How to Make Profitable Investments Throughout the Real Estate Cycle

Opportunities for profitable investments exist at every stage of the real estate cycle. Here’s how to identify which strategy is best for where the market is now.

During the recovery phase, just after a recession or pullback in the market, there is low demand for housing and high vacancy rates. Prices and interest rates are low, so if you have the liquidity, it’s a great time to buy properties below value, or to refinance.

When the market starts to recover, we enter the expansion phase. New construction begins and interest rates are still comparatively low, so your value-add properties’ equity is ready to capture with a refinance. Reinvest in new development, re-development, or purchasing additional value-add assets.

In the hypersupply phase, the market has become overconfident. An abundance of inventory compared to the demand means prices are ready to decline, and construction slows. This is the tipping point for high sales prices; sell now or buy a stable asset for long-term cash flow to get you through the next cycle.

Time for trouble: the recession phase. Over-inflated growth causes demands to plummet and default rates on mortgages and loans to soar. This is your chance to buy properties for rock-bottom prices, especially distressed sales. Go for value add.

Of course, in order to take advantage of the opportunities offered in any stage of the real estate market, you need to know where we are currently; for an in-depth analysis and “You Are Here” guidance, contact one of our advisors.

Source: Million Acres