- Job Growth
- Economic Trends
- Income/Rent Ratio
- Construction Reports
- Population Growth
– Oversupplied of properties
– Very Little/Negative Job growth at this stage
– Rate of Bank Foreclosures Rising
Generally speaking, at this point, we believe it is a little too early to buy as it is hard to tell if and when job growth will improve.
– Jobs begin to be created
– Time on the market begins to-decline
– Competition for foreclosed home begins to heat up
– Little or no New Construction
– Companies begin committing to moving to the area
During this phase, we look to buy everything that meets our criteria and expect to hold our properties for 3-10 years.
– Outside Investors begin moving into the market
– Properties begin to sell above the asking price
– Construction May begin to increase a little
– Investors begin to buy for appreciation instead of cash flow
– At a certain point this market begins to cool down.
During this phase, we begin to sell our properties, and look move on to another emerging market.
– Riskiest phase of the cycle
– Construction becomes excessive
– Number of properties on market begin to increase. They maybe still get inflated prices. As sellers realize the market is turning they begin selling everything at once. This drives the downturn of the market
– Business and Job growth will begin to slow for the first time.
– Supply becomes excessive.
Though this isn’t the ideal emerging market, we will still monitor it closely. Due to the distress and dramatic change, properties will occasionally be sold at a high discount in which we will look to capitalize.
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