5 reasons why you should ABC (always be closing)
Updated: Aug 17, 2022
The real estate (sub)market is a cycle that constantly changes.
Sometimes, and especially for the past 2-3 years, it's a seller's market: homes are getting multiple offers, sold fast, and even over the asking price.
Sometimes, it's a buyer's market where homes sit for a long time, buyers can take their time, and sellers have to compromise on price.
Reason 1: There is always an excellent strategy
The real estate (sub)markets change constantly, and we have nothing to do about it. We are like a surfer sitting on a surfboard in the ocean, waiting for the waves to come, and we can move a bit. We cannot decide when and where the waves will come even by showing up.
When the market changes, it creates opportunities for investors to thrive and move a bit, aka change the investment strategy:
When in a seller's market and prices go up, we can purchase and implement a cash-out refinance strategy - we can buy with cash, hard money lenders, or with private money investors and wait. Every few years, we can cash out refinance and get the equity that the market created for us.
Moreover, we can also force appreciation by renovating and taking more equity out.
When it's a buyer's market and prices go down, the time is in our hands as buyers: we can filter out marginal deals, aim at higher returns, and negotiate better terms with sellers that just want to get rid of their houses.
Reason 2: Relationships matter
Real estate is a relationship business, and you want to stand out to your team.
In this case, the deal sourcing team. If you are buying deals from wholesalers and agents when no one else does - whom do you think they will remember and favor when the market turns, and everybody is buying again?
Reason 3: Keep the machine running
Purchasing deals have many moving parts, and it is like a machine. You need to get leads, analyze them, and negotiate. Then after purchasing, you need to execute the plan, i.e. renovate and place tenants or sell.
Each step of the way requires a different set of relationships and skills - to get leads, you need to know your submarket by heart, know agents and wholesalers and be on their lists as a buyer, and more; to be able to analyze, you need to know your numbers pretty good; to have the capital for purchase you need to know private money lenders, banks, hard money lenders, etc. and these relationships are built on getting better terms to repeat clients.
Stopping your machine means that you can potentially lose these relationships and you will have to start over.
Reason 4: The market will change again
As the market is moving in waves, there will be a time that the market will change again.
If the market changes from going down to going up, you will be happy with the new equity you gained thanks to this new movement.
If the market changes from going up to going down, you can wait a few years and be happy again, and in the meantime improve the overall portfolio by picking better properties that will yield higher returns.
Conclusion and next steps
Now that we all agree that you should always be closing think to yourself about why and what causes you to stop or think of stopping buying - is it the lack of deals? Money? Market knowledge? No time? all of these reasons can and should be addressed fast to allow you to enjoy your real estate journey