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Best Times to Buy & Sell Real Estate!

November 15, 2011 By Leave a Comment

Properly timing the sale of your home could mean tens of thousands of extra dollars in your pockets. Real estate, like many industries has cyclical periods that could have serious effects on buyers and sellers. As strange as it may sound, you can approach the real estate market like a farmer would consider his activities.

We can very easily identify the 4 seasons of spring, summer fall and winter in real estate. Lets use an investment property as an example and assuming that you want to be in the game for a long period of time.

A farmer would typically plant in the spring and harvest in the fall. Plan in the winter and tend in the summer. So how does this relate to real estate?

Real estate cycles don’t necessarily reflect the temperature outside or a particular calendar month. It illustrates the fact that prices don’t go up in a linear motion and there are months or years when prices increase more or less.

Just like a farmer would read books and educate himself about different products in the winter a real estate investor’s job is to take courses, learn new strategies, etc. when prices aren’t increasing at all.

When real estate prices start to rise, investors need to start purchasing or planting their seeds as a farmer would do the same.

Summer is the best cycle to be in either as a farmer or as an investor. When prices are still continuing to grow we need to look after our real estate portfolios. Sometimes we have to complete smaller renovations at our properties, find new tenants etc. At the end of the day our whole purpose is to manage our investments and make sure that our investment will be in great shape for harvest when it’s time to sell.

Fall, this is the most exciting time out of all 4 seasons. Lets rake in the profits! If you are a wine lover, you know that the sweetest wine comes from a late harvest. However the people producing the wine are sometimes risking all year’s work in case of an early frost. To determine the best time to sell, you really need to be on top of your game. I always recommend selling before everyone else does. Never wait to get out at the very top, leave something on the table for someone else to be greedy. To determine when it is the right time to sell, you need to be able to do your own due diligence about what’s driving the real estate industry.

Far too often, we listen to daily news and we only base our decisions on the short term outlook. Not that long ago, I read a newspaper article about our former Premier, Ralph Klein. In that article I was surprised to find out that he never reads the newspaper because he doesn’t care much about the daily news. He rather do his own research from an independent source who has no interest in providing bios information.

What if you aren’t looking at real estate as an investment? Rather you just want to decide what is the best time to sell your principal residence?

July, August, December and early January are usually the best times to buy. The reasons have to do with prices softening during these months and less buyers to compete with as most have taken a break from the market to go on vacation or they have committed themselves to some family time with holidays or recently succeeded in buying their home in the spring or fall.

Another reason these months can be good for buying pertains to the cycle of price increases–often in September (the fall market) and early spring (the spring market) the prices go up in our appreciating market. Just waiting an extra few weeks at certain times such as mid-August or early January can cost one 5-10% on their home purchase. Paying tens of thousand of dollars extra is an insane amount of money for waiting a few weeks longer for what one was planning on doing anyway when it was more convenient just because you waited an extra month.

Usually the increase in the fall is less than the one in the spring but several percent on a $500,000 house is very significant. If one is going to buy… it’s non-sense to do it several weeks late and spending $10,000s of extra for the same property. In the fall the buyers come back to the market again as they get into their routines–kids going to school, working, vacation planning and a whole new set of buyers that are just starting with the hopes of being in a new home by the end of the year.

For sellers, the worst time of the year to sell are the months listed above that are the best time for buyers to purchase. Sellers listing in July/August/late Nov/Dec/Jan/early February are not going to get the highest dollar for their house. List at the time the demand is highest and when inventory takes a dip.

It pays off to think ahead a little bit and plan your moves in advance. Remember, just like a farmer knows when to spend time to educate himself, plant the seed and bring in the harvest. If you do the same, chances are good that you will maximize your profit.

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Common Mistakes of Commercial Real Estate Investors

November 15, 2011 By Leave a Comment

Are you considering getting involved in commercial real estate investing as a career? If so, then there are some things that you are going to want to learn how to avoid. You’ll want to try to avoid the common mistakes and you’ll also want to be sure that you know the important things to do when you are involved in commercial real estate investing. Sure, more than likely you still may make a few mistakes along the way, but the more you learn about investing, the more likely you will be to avoid all of those common mistakes.

Things to Do

When you are involved in commercial real estate investing, there are some things that you will need to remember to do all the time. The following are a few of the things you need to remember to do when you start investing in commercial real estate.

Always Investigate the Deal – Before you close a commercial real estate deal, it is important that you take the time to investigate the deal. This will mean that you have to take the time to do due diligence on any piece of property that you consider investing in. Never think that you can get by without doing your due diligence, or you may end up on the wrong end of a bad deal.

Learn From the Mistakes of Others – No doubt you want to avoid making mistakes yourself when you are involved in commercial real estate investing, so be sure that you learn from the mistakes of other people. When you see another investor do something wrong, remember it and learn from it so you avoid making the same mistake.

Learn from Bad Experiences – If you do make a mistake, which is very possible when you first get started, make sure that you learn from your bad experience so that the experience was not in vain.

Know How Long You Can Wait for a Payout – You will also need to be sure that you know how long you are going to be able to wait before you actually get a payout on the investment you make. Make sure you have a realistic estimate on how long you can really wait, or you may end up having problems.

Common Mistakes to Avoid

Of course while there are many things that you need to remember to do when you get involved in commercial real estate investing, there are also some common mistakes that you will want to learn about so you can avoid them. The following are some of the most common mistakes that commercial real estate investors make. Learn them well so you can avoid making them yourself.

Mistake #1 – Ignoring Market Conditions in Your Area – One of the biggest mistakes that can be made in commercial real estate investing in ignoring the local market conditions. Even if you invest in a great property, if you do it in a bad market, then you can really lose money. However, on the other hand, even a bad property in the right market can really make you money as well.

Mistake #2 – Not Doing Proper Due Diligence – Another common mistake that some people make when they are involved in commercial real estate investing, is not taking the time to do proper due diligence. Usually it is best to hire professionals to help you with this job, since it can end up being more expensive if you try to do it on your own and you do it the wrong way.

Mistake #3 – Borrowing Too Much – If you really want to end up in a disaster, borrowing too much money is a mistake that will definitely lead you right there. You should never borrow too much money unless you are sure you will have the capital to pay it off. Remember that when you invest, you at least need to break even, or you’ll lose money. Of course the goal is to be sure that you actually make money on the investment.

Mistake #4 – Not Having Good Exit Strategies – Too many people have found out the hard way that you must have good exit strategies when involved in commercial real estate investing. Be sure that you have strategies for exiting in a variety of different situations. Without multiple exit strategies, you may end up stuck in a deal that you don’t really want.

Mistake #5 – Dealing with Bad Partners – While in many cases the deal or the property can be the problem, in other cases, a bad partner can actually be the problem. If you get involved with a bad partner, it can mean disaster for your commercial real estate deal. In some cases you may just want to get out of the partnership as soon as possible.

Mistake #6 – Taking Risks that are Too High – It is actually possible to take a risk that is too high, which is called overreaching. Going for the big deals too soon can also be a huge mistake. Sure, at some point the big deals will probably come to you, be sure that you don’t overreach towards them and end up in trouble.

Mistake #7 – Having More Land Than Cash – Many investors have found themselves making the mistake of having more land than they have cash to actually cover. If you have many properties at one time and you’re trying to use the gains you get for one to cover what you are losing on another, then you may never get out of this cycle. Get rid of problem properties immediately, even it if seems difficult to do. Then, take your time and focus on the properties that will allow you to make the maximum amount of profit.

All of these mistakes are very common. Hopefully you can learn from them so you avoid making them yourself. However, it is important that you remember that even if you accidentally make a mistake and get involved in a bad investment, there will be ways that you can bounce back and learn from those mistakes in the future.

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