Do you think we will see a sudden downturn in the market?

I hear a lot of talk about a real estate bubble. Real Estate values in my area have gone up over 50% in the last 2 years. I am a real estate investor and own several houses in the area. Do you think we will see a sudden downturn in the market??
- Mike R. in Coral Springs, FL

Mike, while it is true that some areas of the country have seen tremendous appreciation, there is no way to know when the "bubble" will burst. There are, however, a few strategies you can use to help guard against a downturn:

Choose your properties carefully – Single-family homes hold their value the best, followed by multi-family and fee-simple townhomes. Condos are always the most speculative as you have the double layer of risk of not only the market conditions, but of the condo complex as well.

Make sure that the property makes sense as a rental – If you are forced to hold on to the property, you want to make sure you can weather the storm without breaking the bank.

Don't be greedy – If you own several properties and have seen substantial appreciation, you may want to sell some of them now. Many investors have sold at the bottom because they waited too long looking for the top.

Buy at the right price – This sounds obvious, but many real estate investors are impatient and don't wait for the truly excellent values. Also, you will be in a much better position to negotiate the best price if you get your financing secured in advance.

I hope this helps you prepare for the inevitable ups and downs of the market. Please feel free to call me anytime to discuss investing in real estate.

Stephen

If you have a question that you would like me to answer please email me at Stephen@katzmortgageteam.com.

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