The real estate market is a dynamic one, as most property owners or investors know. In so many ways, it’s a microcosm of the bigger overall economy; however, if you don’t recognize the cyclical trends, it can seem out of control at times. As a successful real estate developer, Andrew Shader learned early on that, to thrive in the real estate market, it’s vital to pinpoint each market phase and see the value within its many nuances, too.
Sharing this insight provides real estate developers and property owners with the confidence they need to build their business profitably, no matter what the market phase.
Profitable Results are Possible in Every Phase of the Real Estate Cycle
Many factors affect the overall real estate cycle, including everything from interest rates and the economy to specific market demographics and government policies. That said, developers and property owners looking to make the most of their investments will want to have a firm understanding of the four primary cycle phases of the market.
Recovery, expansion, hyper-supply, and recession are the four main phases of the real estate cycle. While you can assume that one cycle typically follows the other, remember that it’s possible to be a successful investor throughout each phase if you know what to keep your eye on.
Be Aware of Timing Options in the Recovery Phase
Timing is absolutely everything during the recovery phase of the real estate cycle. While it’s not always easy to pinpoint precisely when a recession becomes a recovery, there are certain things to look out for. At the first sign of below-market price options, investors shouldn’t be afraid to jump at opportunities!
If you use the recovery period to add significant value to properties purchased below market value, then you will put yourself in an excellent position for the expansion phase. Recovery is a time to focus on fixing those properties up so that they’re extra appealing as soon as the market picks up speed.
Be in the Moment During Expansion
The expansion phase is dominated by increased demand for housing as jobs and the overall economy trend upward. This boom is the right time to be in the moment and focus on market trends. The most successful investors will use the expansion phase to develop properties that sell above market value and align with consumer preferences.
Stay Strong During Hyper-Supply
The hyper-supply phase comes with a noticeable decrease in demand for housing paired with an excess of property options on the market. Whatever you do, don’t panic.
Instead, view hyper-supply as a phase full of purchasing potential. As fearful property owners liquidate their assets in anticipation of a recession, strategic investors buy and hold those appealing properties at better prices for the next cycle. This approach takes patience, but it works.
Search for Deep Discounts During a Recession
Real estate recessions can be daunting. A poorly performing economy paired with excessive property inventory adds stress just about everywhere.
That said, it’s also an ideal time for a strategic investor to purchase properties that are either deeply discounted or foreclosed. This phase provides plenty of time for investors to focus on creating spaces that will be vastly appealing during the subsequent recovery phase.
About Andrew Shader
Andrew Shader is an entrepreneur and a successful real estate developer and investor in Fort Lauderdale, Florida. He got his Business Management and Marketing degree from Florida State University. After spending years in the insurance industry, Mr. Shader decided to shift his focus to real estate. Andrew specializes in value-added properties and boosting property value through investment.