If you dig deep enough, you’ll find similar horror stories for every investing strategy… (like the ones I reveal on our new Real Estate Market Report here.
Remember the big craze over “Subject-To” investing a few years ago? …where you get the deed by promising to take over and PAY the seller’s existing mortgage?
Talk about being up the creek without a paddle. Besides being underwater, you’ve now got an angry 3rd party – the seller – suing you for breach of contract – or fraud. I don’t care how well you ‘papered’ the deal, it’s an ugly situation.
You could have easily avoided it if you knew your local market cycles.
How about the “pre-construction” investing mania where you put down a small deposit hoping to flip the contract before the property was built?
SOME people made lots of money, many got crushed. It’s all about using the right strategy at the right time… in the right place… but know this:
It’s the market cycle that dictates if you win or lose, NOT the strategy itself.
Even the ‘low risk’ strategy of acquiring properties via lease-options doesn’t work when you’re cycle-blind.
Lease-options let you get control of a property without a lot of money… then you find a sub-tenant/buyer and pocket the difference.
But without knowledge of the market, it’s anybody’s guess how they’ll turn out.
The same local market cycle reality holds for ALL strategies, and for ALL property types.
There’s nothing wrong with that old mantra, “Find motivated sellers, buy low and sell high,” but it needs to be tweaked … Old concepts die hard. The market always trumps strategies…
Here’s the new, simpler investing matrix for the 21st Century:
• Buy when you’ll make money.
• Sell before you lose money.
Think of it as an overlay onto any system or investing strategy you currently use. It makes whatever you’re currently doing, better, safer, easier and lots more profitable, or it can be a used stand-alone real estate investing technique that captures the lion’s share of the profits but requires no previous experience, training or special skills.
How exactly do you know when to buy and when to sell?
Last update of the article: 03/26/2020.