What is the best way to go? Wholesale, rehabb, rent/hold, lease option? What are you doing now to make money/living?
When you ask what to do in a bad market, are you referring to the real estate market in general or to a specific city?
Based on your response, I’ll give you some ideas of what my partners and I do.
Really simple: budget better. Market hasn’t affected us because we just calculate ARV based on disposing properties at -10% of retail and add a 10% or so contingency budget.
We do rehabs and spec builds, no rentals. Rental investors are still buying rentals. Rehab investors are still rehabbing. The game plan is still the same. Lending changed, so we adjusted and changed construction lenders.
I prefer wholesaling in any market, wholesaling has the highest risk vs reward ratio of any other real estate investing method that I have run into.
Your sig link is dead Eric.
This is a very open ended question. The reality is that if you can make adjustments based upon market conditions it is possible to make money in almost any market. Formulas may need to be adjusted. Time on the market may need to be adjusted. Lenders may need to be changed. And the areas where you do business may also fluctuate.
But a good investor that can make those adjustments, and do them in a timely manner can capitalize on almost any market, and on any market conditions.
But here are some general facts about what is happening today across the US and how many are profiting from these conditions.
1 In many markets there is a large amount of unsold inventory. These conditions tend to force prices to go down. Any time prices are going down, it is a great time to buy. But remember, just because you bought it cheap doesn’t mean you can necessarily re-sell for profit. Thus, many investors are currently buying and holding. it is easier to cash flow deals in today market, then when everything was selling for top prices.
2 It is also harder to get financing today then it was just a year or two ago. Many banks have gotten burned by improperly underwriting mortgages and the money supply has tightened in the last several months. The opportunity here, is to take advantage of creative seller financing options. Since sellers still want to get rid of their properties, but the buyers are having a harder time getting financing, then the sellers are more willing to do woner financing and other financing options.
So you see, the key is to make adjustments. Whether you make adjustments to the current deals you are doing, or if you are just getting started, make sure to attack your market with the current market conditions in mind.
I have always stayed in a niche market within the rehab / flip area. I like doing things creative and green - my wife is a great decorator and our houses usually stand out a bit from the rest.
Lately we have been focusing on putting together a modular package for small, affordable, cottage style, new green homes. Personally, I think this is where the market is headed.