Wouldn't it be great if you could time the commercial real estate market precisely?
For example, what if you might predict what the office building market would do 5 years from now in your own town? Imagine if you had a technique and procedure for knowing the ideal time to buy in a certain market. Well, here is a secret, none of this actually exists. But if we could foretell such things, we might be living on our own islands.
But here's the good news. Remember the old adage buy low and sell high? Accept it or not, this is truly how you get loaded in real estate over time. It's a tried-and-true system.
There is a tool that exists of house you buy low and sell high in any market anywhere in the United States. That tool is the real estate cycle. And when you pair the cycle with some awareness of trends, you're sure to be successful. And this holds true whether a smaller market or your having a look at a larger metro for property management, Dallas and the whole metro-plex for instance.
Real-estate cycles are similar to traffic lights. When the light turns green you go. But when you see a yellow light, you go forward, but you continue with more caution. The key to success is essentially knowing what color the light is that you are looking at.
The green lighting commercial real estate investing may be spotted when you happen to notice upcoming job expansion because of a factory expansion. Or, when the requirement to build surpasses the supply available of properties. And you might even begin to notice a large amount of undeveloped land sales becoming active.
A sign of a yellow light could be that of IRs creeping up and leading you to examine the cost of borrowed cash. Or it could be when used begin to see vacancies and assorted leasing specials on the rise. In the yellow light is particularly obvious if you find yourself reading in your local paper how many companies are beginning to struggle.
A bright red light could be signaled by a total halt in any new construction that might be caused by overbuilding in the area. Also, inflating foreclosures and decreasing property values are guaranteed red light.