Trading Up In A Down Market

A Simple Strategy for Building Wealth Through Real Estate in a Down Market

Opportunities to be successful are present in any market – up, down or flat. At the peak of the Real Estate Market in 2005 there were about 8,000 Real Estate agents in Western Pennsylvania. Today there are about 4,000. Has the volume of Real Estate transactions dropped by 50%. Hardly, month to month volume has been down about 11% on average compared to 5 years ago. The worst month volume was down about 30%. Then why have so many Real Estate agents left the business? Have property values dropped? Maybe a little. Only one segment in one market in all of Western Pennsylvania has dropped as much as 30%. The truth is that on average median home prices in our region are flat if not up slightly. Have certain Real Estate agents and Real Estate investors made a killing these last five years? You betcha! General media rhetoric has painted a pretty gloomy picture – showing people losing their jobs and houses. How many have actually lost their jobs and houses? Not many – approximately 10%. If you focus on the data only and ignore the sensationalistic interpretations you will see that things really aren’t all that bad – generally speaking. Why is it that when a red hot economy cools off so few recognize opportunity to succeed?

Well, it all starts with education and information – facts, data – not sensationalistic interpretations. One simple fact is that those who have not succeeded very much in the last five years have probably been influenced by the prevailing sensationalistic rhetoric and those who have been successful have focused on the facts (information) and used their education to execute a few basic moves in a simple plan to succeed.

One such move is a technique I call trading up in a down market. It’s Monopoly! Sell 3 green houses and buy one red hotel. For example, if you lived in a house that was valued at $200,000 at the peak of the market and sold it when the market was down 10% you would have lost $20,000. Now let’s say you bought a house that was valued at $400,000 at the peak of the market and you now bought it for 10% less because the market was down 10% you would have saved $40,000. In essence you traded $20,000 for $40,000 – not bad! That’s a deal I would do every day. And I actually did. If you are an investor why not sell a few duplexes and buy a larger multi-unit complex. I did just that. Very simple. Very Basic. Monopoly!

I salute those of you who have succeeded in the last five years. All others take heart. There is hope for you too after all. Invite those in the former group to lunch, dinner, a round of golf or a cold beer if it’s 95 degrees out like today. More importantly, seek out those who walk the talk. If your game is Real Estate shouldn’t you be getting answers to your questions from a Real Estate agent who actually builds their own wealth and income from investing in Real Estate ? Education. Information. Monopoly.

Gary Wilson is the founder and Broker of Win Realty Advisors, LLC, a Real Estate company dedicated to helping friends and neighbors realize the American Dream of not just owning their own home but also building wealth and income through Real Estate. Gary and his performance team offer free consultations on a limited basis. For more information please call 757-751-0415 or email [email protected] and one of the performance team members will educate you and provide you with the information necessary to succeed.