Tuesday, December 04, 2018 / by Alan Chambers
When house flipping became popular, everyone wanted to figure out how to make their own fortune in real estate investing.
People here in Ridgefield were no different.
Clients, friends, and family were coming out in droves trying to figure out how to build their wealth with Ridgefield real estate investments by predicting the market.
While I never recommend that anyone try to predict the real estate market and predicate their investment portfolio that way, I do believe it is important for real estate investors of all types to have a full understanding of the four main phases of the real estate market cycle.
Phase One: Recovery
During the first phase of the cycle, otherwise known as the Recovery period, we see little to no new construction being built and very low vacancy numbers. As a Ridgefield real estate investor, this is a savvy time to start buying up as many properties as you can. Unfortunately, this can be a challenge for some because lenders are also tighter on rules and regulations during this time. However, if you have liquid funds or the ability to leverage your retirement account to start investing as many newbie investors do, this is a good time to jump in with both feet.
Phase Two: Expansion
During the Expansion phase, vacancy rates continue to decline and new construction projects begin to emerge. This doesn’t happen overnight. In fact, it usually takes a couple of years. However, as occupancy rates continue to rise during this phase, investors in multifamily units will benefit in a big way. Rental occupancy rates and rent rates themselves often peak during this period because most buyers are still too scared to buy or haven’t yet built up the ability to do so. As a Ridgefield landlord, you stand to clean up during the Expansion phase.
Phase Three: Hyper-Supply
This is the phase where new construction is really hitting its stride, resulting in an inverse increase in vacancy rates. At this stage, buyers have regained more of their power and confidence in the market and begin transitioning from apartments to homes of their own. Amazing deals can be harder to come by than they were during Recovery, but they can still be sniffed out if you’ve got an experienced Ridgefield investment specialist like me on your side.
Phase Four: Recession
While it is highly unlikely that we will see a recession like that of our recent history anytime soon, that doesn’t mean we won’t see smaller ones. It is a part of the cycle like any other. A recession is characterized by a decrease in the rental, occupancy, or new construction rates. What we saw in 2008 was a steep decline in all three which is why properties lost their value so dramatically. As a real estate investor, you can still find your way to profits during this phase. However, you will have to be extra careful when analyzing the costs associated with holding each unit, along with the potential profits to be earned.
Why Ridgefield Real Estate Investors Don’t Need To Worry About A Real Estate Bubble
Whether you prefer the safer investment of buy-and-hold long-term real estate investments or the rush of the short-term flips, there is always money to be made throughout the cycle. The key is to know what to look for, keep your emotions out of the game, know your numbers, and rely on the expertise of a professional Realtor that can help hedge against risks.
Have You Ever Considered Investing In Ridgefield Real Estate?
When you are new to the real estate investing game, it can seem a bit mysterious, risky, or intimidating.
However, when you hire a Ridgefield real estate investment property specialist like myself, I will work with you to make sure that:
Investing in Ridgefield real estate makes sense for your financial goals.
You don’t purchase a property with hidden risks that hurt you later.
You get the best purchase, rent, and sales price on every property you invest in here.
You are never bogged down by the mountains of paperwork involved with investing in properties.
As a member of the Ridgefield community and a fellow investor, I am deeply passionate about helping Ridgefield residents build their wealth and live their best life through real estate investing.
Whether you are just considering investing for the first time, don’t know if you can afford to invest, or are ready to strike now while the iron is hot, give me a call and I’ll give you a customized plan based on your needs and goals.