Real estate development and investing isn’t just about looking for a good deal from one day to the next. It’s also about keeping a close eye on the markets, identifying the relevant market trends and deciding when to make your next move with a subtle approach or an aggressive one.
So, how do you zero in on what could be your next big deal that makes for a massive win for everyone on your team? You can certainly go by the books, but the most successful real estate experts in your field will tell you that there is more than one way to get the job done.
Below, 13 members of Forbes Real Estate Council offer their best tips on how developers and investors can keep a close eye on fluctuating markets and how they can determine when is the best time to act in response to trends they notice.
All photos courtesy of Forbes Councils members.Experts in real estate share what they know.
1. Talk To Experts
The type of project and timelines would play a pretty major role here. The best way I have found to stay on top of market fluctuations is to attend local networking meetings or local market update events. By talking to people, I can get a good feel for what is happening in the current and local environment. – Kevin Amolsch, Pine Financial Group, Inc
2. Check Rental And Homeownership Reports
There are several reports out there that keep track of real estate changes throughout the nation. Some useful ones include the U.S. Census Bureau’s report on construction spending, which tracks both residential and non-residential, as well as private and public spend, the National Association of Realtors report on number of homes sold per month and reports that track fluctuating rental trends. – Anthemos Georgiades, Zumper
3. Watch For The Drivers Of Demand And Supply
By the time you notice a shrinkage in demand or market saturation, it’s too late to do much, given long lifecycles of projects. We look for data that are key drivers, like permit applications, loan applications, etc., to see what supply will look like in future. We look for demographic shifts, job growth and migration trends to understand demand in the future. Watch for the second derivatives. – Ridaa Murad, BREAKFORM | RE
4. Stick To Your Investing Plan
There will always be ups and downs in the market, so instead of being worried, you have to stick to your investing plan. As a real estate developer, we have been hearing about how interest rates could be increasing anytime as a scare tactic, and to date, have remained low. Beware of what is happening in the market but overall, if you stop developing, it could end up costing you a lot in the future. – Pamela J. J Goodwin, Goodwin Commercial
5. Get Back To The Fundamentals
Yes, the latest tech boom is very sexy, but remember what drives the majority of Americans: Blue collar jobs, and pro-business governments. Look for these leading indicators: New class-A units coming online and their absorption, employment rates and new job creation, and where employers are migrating to. – Lane Kawaoka, SimplePassiveCashflow.com
6. Focus On Population Growth Vs. Fluctuating Markets
Instead of focusing on a fluctuating market, developers and investors should shift their focus on monitoring cities with growth and corporate relocations. An investment in land, homes and commercial properties within the cities seeing a climb in population should trigger an immediate course of action. Regardless of a market downturn, the cities with a consistent growth in population and corporate relos will always have a profitable ROI. – Angela Yaun, Day Realty Group
7. Get Detailed Area Information
Select a particular zip code or zip codes and immerse yourself in every little bit of information relating to that area. Once you hear there is a new employer coming to town or that the city is stimulating growth in the region, that would indicate a good time to make a move. – Engelo Rumora, List’n Sell Realty
8. Stay As Close To The Action As Possible
Developers and investors need to stay close to the action. Since you cannot do that in your daily routine, ingratiate yourself with those who are in the thick of things — brokers. Listen to what they are seeing/hearing so that you can get out in front of a trend. If you’re taking action responding to a trend, you’re already behind the curve and have probably missed the real opportunity. – Lee Kiser, Kiser Group
9. Check The News, Monitor Social Media
Check the news for the latest market reports, monitor social media and chat with a real estate agent. Stay in the know to avoid going in blind and better understand the current market situation. Right now, we are seeing low inventory coupled with extremely high demand. When you see the market moving in the opposite direction, that’s when you jump. – Joshua Hunt,TRELORA
10. Know Your Data, Both Static And Over Time
If you track your own numbers, you see trends before the rest of the market. For example, landlords who track days to rent will always know when a market rent bump is coming. Lots of flippers look at data like days on market but unless they track it over time, they won’t see the slowdown coming. Static data is great, but watching data in time cohorts is the best way to act on trends timely. – Beth O’Brien, CoreVest Finance
11. Keep An Eye On Inventory, Recent Sales
Successful developers must predict where the market is heading. We use several methods to “see into the future” to project feasibility for our developments, and of these, two methods always rises to the top: 1) What direction is housing inventory heading? and 2) What direction are sale prices heading? Study these two factors closely and you’ll be much more confident in your projects’ feasibility and ultimate profitability. – Garratt Hasenstab, The Mountain Life Companies™
12. Stay The Course And Do Your Homework
Flexibility is key in fluctuating markets. Look for the opportunity that satisfies your investment criteria; if it doesn’t meet your returns, walk away. Do your homework! Drive the area, call on other properties around it, talk to tenants in the market. Visit the municipality to see if there are any upcoming road changes or developments in the works. It is amazing the type of information you can gather by doing on-the-ground investigation and due diligence. – Jill Szymanski, Bar Louie
13. Know The Strengths Of Your Strategy
Each investment strategy has its cyclical strong points. It’s tough to be an opportunistic buyer in a hot market where the prices are being bid up strongly. Ground-up development is tough when prices are in free fall. If you know the strengths of your particular strategy, it’s easier to know what to monitor. – Mike Harris, CREModels
[“Source-forbes”]
