In Dean's new book, "Profit from Real Estate Right Now," Dean discusses the cycles of each market and whether your in an up or down market and you may need to adjust your strategy based on the market cycle. This is so critical to understand where your local market may be in a cycle at any given point in time. There are longer cycles and shorter cycles, there are seasonal cycles, especially in the midwest, economic cycles, etc. Thus, the more you understand about your target market investment area the better you will be able to craft and draft your offer for future deals.
In an earlier post, I went into detail on how and why I compile "my property tracking radar book". The other information I like to track is how hot or cold a market may be and try to understand what is driving that market. I have a temperature gauge for the market...is it Frozen?....Ice Cold?....Cold?...Warm?...Hot?...or Boiling?
Based on how quickly homes are selling, based on days on the market and understanding the trend of pricing for those homes will determine how the market temperature is doing. If the average 3 bedroom 2 bath 1,000 square foot home is selling in an average of 30 days for $89,000 and then in July 2009 the average goes to 20 days and the price goes to $95,000 on average, I look at all factors and try to determine what is happening.
Thus, you may be able to find greater deals when you determine the upswing of a market area if you know what may be driving recent sales. I hope this helps. Good luck to you with REI and I hope your real estate market is "hot" from Hawaii to Alaska and also on the mainland from the East Coast to the West Coast. Believe and Achieve! - Joe
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Joe Jurek CPA