| y"> | | | | decreases. Then there are often extended |
| We have all heard the saying - "The three most | | | | periods of flat to small increases. The key is to |
| important things in real estate are location, | | | | know when to buy and sell in the cycle. |
| location, location." | | | | Obviously, you want to buy during the flat period |
| Now there is no doubt that location is very | | | | just prior to the next uptick. Determining this |
| important in real estate. But, over time, locations | | | | exact time can be difficult. But if you study long |
| can change. What was once a great location may | | | | enough you can spot the signs. |
| have deteriorated. The investor should realize that | | | | Let me give you an example of good timing. I |
| many of the variables involved in making money | | | | bought a parcel of land in 2004 for $45,000. The |
| in real estate can be changed or altered. You can | | | | man I bought it from paid $28,000 for it back in |
| upgrade a home, lower the selling price, give a | | | | 1986. In 2006, the land was appraised at |
| buyer incentives, etc. But it is not that easy to | | | | $105,000. Now leverage aside, I made an |
| change or alter a location. Locations can and do | | | | annualized return of over 50%, while he made an |
| change over time. But it is very difficult to alter a | | | | annualized return of 3%. Well, I hate to tell you |
| location over the short term. | | | | this, but it was the same location and we made |
| Well, sorry to burst your bubble. I will now tell you | | | | drastically different returns on our money. |
| the most important thing in real estate (that is | | | | Was the reason I did so well because I studied |
| assuming you want to make money). | | | | and analyzed the market and knew prices would |
| TIMING! | | | | substantially increase, or was I just lucky? |
| The real estate market is noted to have many | | | | In reality - it was probably a combination of both. |
| cycles of boom and bust. While it is true that real | | | | You need to do your research, but it certainly |
| estate generally will go up 5% annually over the | | | | helps to have luck on your side. |
| long term, there are generally short term periods | | | | So remember, the old adage is true - "timing is |
| of substantial price increases followed usually by | | | | everything. |
| shorter term and less volatile periods of price | | | | |