Making Money from Real Estate During an Economic Downturn

Looking at the latest information regarding the global credit crunch and the possible slowdown of the global housing market (or rather the local housing market globally) the clear thing is that the housing market is in for a rough ride and whichever way you look at it those in it will need to be both tenacious and creative in order to survive.

But what does that mean exactly? How do you survive in a tough real estate market, let alone make money from it?

This is exactly where the skills of the real estate investor come into their own because the core of a tough-time survival strategy relies on the ability to identify and take advantage of an emergent real estate market.

Emergent real estate markets rely on micro-economic conditions that defy the large-scale trends of the economy at large and, when handled properly and exploited to their full capacity provide a real estate gold mine for the savvy investor who knows how to close deals that create a win-win scenario.

Emergent markets are governed by different dynamics which make them as likely to emerge during bust cycles as during times when the economy at large is booming. Identifying them relies on being able to assess and then respond to a number of subtle and not-so-subtle warning signals which then shift the focus on the need for speed.

Because emergent real estate markets represent a pressure-cooker environment everything in them happens faster than in a normal market which means that the opportunities are there at the beginning and they begin to plateau and then tail off.

Savvy real estate investors who know how to make money from a slowing economy are quick to identify an emergent real estate market, get in at the beginning close deals fast and then get out just as things normalize and the market begins to experience the same problems and pressures as the rest of the country.

Of course, the assumption here is that as a real estate investor who clearly understands the value of emergent markets you have in place all the tripwires you need to alert you in time that something is actually happening. Setting these up, what they are and what you should do as well as how you should evaluate them are the subject of a different article and I cover them in detail in most of the courses and workshops I run.

The point here is that by being alert to the micro-economic opportunities of the real estate market you get to make money no matter what stage the economy at large actually happens to be at. Real estate investing is a recession-proof business but for that to happen you still need to work smarter rather than just harder.