There’s no shame in being a first-time investor. You should be proud that you’re willing to take that illusory “giant leap” into real estate—it’s more of a simple step.
But you can’t jump into real estate blind… especially when I’m providing you with your very own ‘Wealth Map for First-Time Investors’.
This map takes you through the 4 phases of the real estate cycle, and tells you exactly when you should buy and sell.
After reading this, you’ll have the upper-hand over all the other first-time investors, as you use your newfound real estate skills and follow the map to wealth…
Like most things in life, real estate runs on cycles.
More specifically, it cycles through 4 phases that alert you when you should buy property and when you should sell it.
These 4 phases are absolutely essential for any first-time investors that don’t have a clue when to get in the market and when to get out.
Phase 1 is the buying stage. This is really the only phase where you should be looking to purchase property.
This stage rolls into full effect when you see vacancy declining, but there’s no new construction projects underway.
Also known as the recovery phase, this phase lasts several years, and there’s no extreme rush to jump into a purchase unless you’re absolutely sure that Phase 4 has finished.
There’s room in this type of market for a lot of people to make a lot of money, so you’re not missing out on much if you let the big spenders jump on the earlier investments.
Let them take the risk, and if it works for them, it’s a perfect time for you to purchase.
You’ll start to notice that the people who bought during the other stages will finally throw in the towel at this point, which provides the perfect buying climate in any phase 1 market.
This is the expansion period.
You’ll see that vacancy is still declining, but new construction projects have started to take form.
Construction will generally begin when vacancy falls below 10%–which is considered to be extremely healthy.
This surge in construction is what causes phase 3 later on.
You can let this cycle run for a couple years, then your best bet would be to get out. The sweet spot for selling a property that you bought in phase 1 lies right in the middle of phase 2 and phase 3.
Otherwise known as the hyper-supply phase, this is the perfect time for you to sell.
By this point, the surge in construction has pushed supply above demand and vacancy starts to drop.
Rental prices become a lot cheaper, but housing prices are about the highest they’ll go. That’s why you want to sell, and then wait until phase 1 before you buy again.
By this point we’re in a recession—which is the best time to figure out your next purchase.
You’ll notice that vacancy is at a high, and those construction sites have become completed buildings. The supply has the demand covered 2 to 1, and renting couldn’t be any cheaper.
Home prices will continue to decline until the signs of phase 1 start to reappear.
When the people who mistakenly bought in stage 3 start to sell, phase 1 is on the horizon, and you should be working up a short-list for your next purchases.
Don’t even think about buying a thing until phase 1 has re-emerged. The deeper the market drops, the better opportunities we’ll have when we go to buy.
These 4 phases should be used as a general rule of thumb, but keep in mind that certain market movements trigger lagged movements in other types of real estate. For example:
The first type of real estate to enter an emerging market will be residential. This will be followed shortly after by retail—people moving into new homes will need somewhere to shop (grocery stores, shopping centers, etc.).
The surge in retail will then drive the industrial and distribution centers. By this point, residential real estate will probably be pushing into phase 2.
The last to join the party is commercial real estate, which provides a great opportunity for us. As everything else moves into phase 2, we still have the perfect opportunity to jump in on commercial real estate.
We can also use the signs from the other types of real estate to gauge exactly when to get out of our commercial property for a big, fat profit.
By following this ‘Wealth Map for First-Time Investors’, you’ll have no problem jumping into your first real estate investment. But remember, don’t try to go against the cycle. Your emotional ties to any particular property must be severed.
Allow the cycle to show you exactly when to buy and sell, and you’ll start seeing the easiest money you’ve ever made.