My Advice to the Wise Investor

The American housing market may have officially crossed the line from correction to stabilization. Historically, after stabilization the phases are recovery and revival. All entrepreneurs should take a close look at real estate investment opportunities over the next few years, since this is when the money is really made.

As you can imagine, timing the real estate cycle is critical to achieving big returns on investment. Of course, there are other strategic objectives like picking winning markets, purchasing investment properties, increasing value by rehabbing the property, maximizing cash flow in any market and more. This article, though, is dedicated to the market cycle, how it works and where we are in it.

Visualizing the cycle in its entirety is the easiest way to grasp its predictability. But in order to see the pattern you have to zoom way out and see the forest through the trees, as it were, because one pulse in investment properties takes 12 to 15 years.

Now, consider the following two cycles of median home prices. The first, from 1983 to 1996, started with the economy in rough shape. Then an economic boom pulled real estate and the Dow index way up. It was a big party, everyone was making money, and then banks got a little crazy with their lending standards and the whole thing went off the rails — stock market crash, massive bank failure, real estate market correction and a serious recession. You know the rest of the story.

In summer of 2009 I predicted values to hit bottom in summer 2010 and stay flat for five years, only to go back up significantly when tax-cutting becomes the policy and the economy booms again.  Note that price point will play a crucial role in recovery.  Entry level housing will see recovery long before the luxury home market sees the light of day.  Some markets across the country will emerge much sooner than others.

The good news is that it’s pre-boom all over again. The better news is that now you are aware of it at a very early point, so it’s the perfect storm.  And the best news is you have plenty of time to get your assets in gear and take a position.

You don’t have any liquid assets at present?  Your credit score is shot due to the impact of the recession?  You fear taking that leap back into the REI market because of the unknown?  Then you probably need to speak to a real estate mentor.  I suggest you check out the Mentor for Life business plan that I put together with my awesome team.  It may just be your answer to the foregoing questions.