In a Bull Market, be a Bull.

Dated: February 21 2021

Views: 275

In a Bull Market, be a Bull.

“It’s a sellers market. I don’t want to buy now and risk paying too much”. Perhaps you have heard someone say this, or perhaps you yourself are thinking it. Yes, real estate prices are high. But are they at the top? Will they go up more? Will there be a crash?  What to do?

If I don’t sell you a home or an income property, it will not change my life, but it will change yours. I have never been shy about offering my opinion, as you long time followers can attest to, and today will be no exception.

Like in stocks and crypto currency (both of these asset classes I have in my portfolio) it is impossible to time the market. In stocks and crypto,  I dollar cost average (DCA)  in. That is to say, I buy on a program, so many dollars a week or month.  In real estate this is not possible.  But there is one huge difference. Real estate prices always go up, you just have to “play the long term”. So unless you are doing a quick flip and need to predict the selling price for the short term. Just do everything else right.

Cost of money. The low cost of money today is one of the drivers of higher prices. But it is also the reason to buy now. I would also suggest that alternative investments to real estate in general offer lower returns and real estate. Currently I'm fully immersed in the cryptocurrency market it has some exciting , but risky high returns, but with super high inflation on the horizon you do not want to have cash but assets. Leverage is a wonderful thing but Please remember that leverage is a sword that cuts two ways so use it wisely.

Time is the great equalizer. As I've mentioned, it's impossible to time a market but the historic rise in real estate values will be your friend. Do not plan on 5 to 10% increase the first year after you purchase on the value of your purchase  ( unless its income property) , but I do personally plan on a 5 to 10% increase in value over 10 years or more.  Set a realistic time frame.

Location.  I've said it many times before; You make money when you buy not when you sell. Choose wisely and get good local advice from your professionals. Not just the general location, but the hyper location as well. Remember one side of the street can be worth more than the next.

Improvement.  It is important to be able to physically and or financially improve a property. Minor improvements can leverage a value up quickly . Financial improvements like increasing the rents or lowering the cost of ownership also have an immediate affect. Physical improvements like a new roof , hurricane windows and low maintenance items such as a new AC or landscaping can lower the cost of insurance and ownership.  Remember to only buy fixable problems.  

By “what is”, not “what is going to be”.  It's a common mistake to buy further out, or not as good a location, or not as attractive a view to save money. Don't do that. The view, the location, the extra car garage, all contribute to more rapid appreciation and higher demand. If we have a market adjustment the neighborhood may not become what you expect it to be soon enough , so buy “what is”.

Don't let your ego get in the way of paying a few thousand dollars or percentage points more. We are in a competitive market and there are more offers that are not accepted these days, and more offers above ask. A $5000 bump in price is a wise move these days. Don't try to prove to your professional or your spouse what a great negotiator you are. Your skill set is not in question it's your success in acquisitions that's important.

Write down your goals and adjust as necessary. I find that writing my wants and needs down and establishing a plan gives me a benchmark when I'm looking at acquisitions. As I learn, I can make adjustments to these goals. Share your written objectives and goals with your professional and seek their input. “Here I wrote these things down are they reasonable?”, Communicate with your professional regularly; if you find a house or investment you like,  tell him. I advise my clients that most likely they will find the house they want to buy, not me, I can give them the tools, the advice, and the local input.  I also know how to save them money and can point out unseen obstacles and opportunities.

In a bull market be a bull. The origin of this expression between bulls and bears has to do with the approach. Keep your head up and your wits about you. Attack. Do not be afraid to join a rising market but never ever try to catch a falling knife.

When will the market fall? How much will it fall? My prediction is that we have another two years. Money is going to remain cheap, and the United States can't keep printing money without having huge inflation. I'm putting my money in real estate and in crypto currency. Real estate for the long term . Crypto for the next few years. As I take my profits out of crypto, I will be buying rental properties.  I am dollar cost averaging into crypto and I will dollar cost average out and put that money into income producing real estate.

I favor vacation rentals and “build to rent” single family homes. If I can help you with your buying strategy I'd love to chat with you and as always, I welcome your comments.

Blog author image

Gregg Fous

Real estate has been my passion since I took my first Al Lowery class on real estate investing in the 1970’s. I vowed during that class that I would buy one property a year. Over the next five ....

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