The Do’s and Don’ts when investing in Real Estate during down markets

 

The do’s and don’ts when investing in real estate during down markets:

  • Acknowledge the overall negative sentiment of the market: Which means every 10 people you ask about investing in the real estate market, you will hear back panic and negative answers. And recognize that this is exactly why it is the right time to invest.

  • Remember, if it is a down market, it means better times are bound to come: It does not have to be the worst point of the down market. The only way for you to exactly identify when will the market bottom-out and start to bounce back, is when it actually starts to bounce back in real life. At that time, whoever you are buying from would have identified the same and hence put their prices up.
  • Find the right knowledge partner: Real estate experts can enable you to access a world of opportunities to make tons of profit.
  • Using bank money during down markets can truly maximize your ROE like never before.   
  • Start identifying, acknowledging, and accepting the main triggers behind the falling market you are in: Markets can go down for a limitless number of reasons, it is important to understand them so you can plan your next steps accordingly.
  • Estimate the term/period of the current market challenges: You can not exactly predict the future, but it is always good to set some assumptions around the time frame for the current challenges that drove the market down to finish or to adjust.   
  • Decide to look for opportunities through market setbacks based on the advantages a down market offers you: Target prime locations, prime projects, and prime units within the project of your interest. This is exactly what will immensely maximize your profit at the exit.  
  • Identify the risk factors but don’t let them hold you back—unless you believe that you cannot afford the risk. Know your boundaries and your comfort zone.
  • Make the move and invest: Don’t overthink and don’t stay still waiting for the right moment. Get moving, don’t stop searching for the right opportunity and when you find it, don’t hesitate.
  • When you are planning your investment exit, don’t overthink it: Work with whatever fundamentals and facts that you currently have in hand; it takes a crystal ball to accurately predict the future and we are not in that business. Your knowledge partner should be able to sit with you and work out some exit strategy guidelines like who is going to buy from you, why, and when.
  • Do not panic over short-term market turbulence: The market may still fluctuate. Hold your ground and don’t panic. It will come back up.
  • Stay in touch with your knowledge partner: After making the transaction, keep in touch with your knowledge partner every now and then. You never know when a golden exit opportunity for your investment, comes their way.
  • Don’t be overly greedy: Once the right exit opportunity appears, exit at that time. And, exit urgently if you encounter any outstanding or unrealistic rise. 

 

 Firas Al Msaddi 

 

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