and on the way down it decreases every day.
These are the words of wisdom from Ozzie Jurock, a long-time real estate investor as he shares his take on how to make a move in the current down cycle. This concept is especially hard to wrap your head around when you are watching price drops happen around you, you are reaching for your wallet to commit, and your neighbor is shaking his head at why you are “overpaying” for a property.
Real estate always has, always will, be cyclical in nature, and smart investors make their decision based on fundamentals, not the emotion of the neighbors, their city, or the media. Here are a couple more bits from Ozzie, then I suggest you read the full article entitled, “Shop Wisely and Make Offers” here.
Buy “use” to you or your family — buy your own business space … and don’t worry. The best deals come in down markets.
For 40 years, prices soared because we lived through the most unreported inflation of all times, because we printed more money than ever. Today, this is even more the case. All that extra cash created out of thin air will continue to compete with the money you and I make and drive hard asset prices eventually higher again, after we clear out the messes and the excesses, just like we did in 1992 (or 2001, 1998, 1987, 1981, 1974).
From an investor’s perspective, we like cash-flowing properties anywhere — where there is a good employment base, low vacancies, capital investment and a good price-to-rent ratio. We see that developing in Edmonton and many small towns throughout Alberta.
Another piece of Ozzie’s advice is to “overcome your fears and write offers.” I can’t stress how important this is in the current market conditions. So many vendor’s I have spoken with know they are priced high, but stress verbally they are negotiable. They aren’t negotiable with a tire-kicker making a verbal offer – they need so see a signature and a deposit. With more available product now is the time to shop hard by writing offers on multiple properties – leverage your opportunities against each other. One thing you need to understand about most vendors is that they don’t have a store full of product to move off the shelves – often they only have one product. Can you blame them for pricing in such a way “just in case” they can pull it off?
Many vendors are on the verge of dropping their price, and all of a sudden your low-ball offer isn’t so low, its right in line with their new price. Do you want to have the first crack at a lower price? Or wait until the new more attractive price is advertised in the newspaper for all your competitors to see and jump on? An offer with a signature, deposit, a well-written cover letter featuring a price backed with new comparables will take you places you never expected.
I have to throw in one more Ozzie quote – forgive me for the blatant self-promotion but sometimes its just too easy:
The key is that you shop wisely, get a professional realtor, research, overcome your fear and make offers.
