Analysis of Market Trends by Private Money Lenders Arizona

Welcome to Real Estate Investing Today brought to you by private money lenders arizona. My name is Ryan Wright and I am happy that you decided to join us. I want to talk today a little bit about why it is so important to know where the market is trending. You see, trends are going to tell you what has been happening with property values. Now, although trends are historical thing, they are not futuristic. So using trends, some propel say you can predict the future. That is not necessarily the case!!

The trend is just going to tell you, what has happened in the history. So I would like to say that the history is going to show you what is capable of happening in the future but not necessarily what will be happening in the future. It is safe to assume that if there has been a downward trend over so many months. Then that downward trend is going to continue unless there is justification to show why that trend should be stabilizing. But to assume that if in a market place, there has been 2% downward trend every single month, to assume that is going to flat rate or even worse, increase is probably a bad assumption and looking at that is going to tell you as a real estate investor what the future lies.

You see, if you are buying a property and it is going to take you 30 days to fix it up and 30 or 60 days to find a buyer and 30 days to close. This means you are talking about 3-4 months and you have to keep in consideration what the devaluation of that property going to happen over that quarter. So if you have a property where over the last year, the history has been a 12% deterioration of price then you have to realize that there is going to be a 4% discount on your property when the time comes to sell it versus what it is today.

So if you value the property using steps and tools that we have talked about in past sessions, you can look at that and say the property is worth this if you sell it today. If it was fixed up but it is not today and trend over the past 12 months shows the properties have been deteriorating 12% over the last 12 months, which means it is going to take you four months before home solds. So I have to assume a 4% decrease or decline in prices. So when you are evaluating that property to know that property is really worth or whether the property is really going to sell for knowing the history knowing the trends of what happened can help you predict the future.

Now it is not something that you have to get too crazy about. But it is something you need to be aware of. If things have been flat lined, if it is safe to assume to say that you probably would not see any depreciation. But if things have been on a downward cycle for quite some time, then you need to take that into consideration. Let’s say, if there has been a 12% appreciation in the area over the last year or 1% a month. Lots of people assume that they will sell the property for more money in future because trend has been upwards and that is not necessarily the case. The problem is that the properties aren’t sustainable. So if you are looking at an increasing or appreciating market you should not take that into consideration when it comes to your price. But if you are looking at a declining market, then you should and must take that into consideration and bring your price down based upon what the history has shown for that particular time. We recommended a plan on six months; some flips typically can take 4-5 months. We think it is smart to plan on six months and calculate accordingly.

Now we have some tools at Private money lenders Arizona that can help you to know what the trends are happening in the market place and it is called a market summary. Market summary is going to go through and tell you history of property, who owns it, what it sold for in the past? It is going to tell you the trends i.e. what is happening in the neighborhood? If the prices are going down or prices are going up over the last 12 months. It is going to show you how many homes have been sold in that specific area or in the county, so that you can see if properties are going down in value and what property you are selling, if there is less property selling.