When novice investors enter the multifamily real estate market, they tend to go after properties in the “hot” markets and in metropolitan areas with the potential for explosive growth. This approach to investing represents the fast approach to making a profit. These investors go after the No. 1 markets without thinking about the volatility that may have led to the sudden jump to the top. Unfortunately, sudden jumps can precipitate sudden falls. In order to invest successfully in a volatile market, individuals need to have excellent timing.
Conversely, the slow and steady approach to investing relies on predictability. When investing in predictable markets with slower but steadier growth, investors can make reliable forecasts that result in steady and consistent returns.
It is helpful for all investors to think in terms of market conditions and market fundamentals. The “fast” approach is concerned with market conditions and the “slow” approach with fundamentals. Investors also need to listen to experts. For example, look to Texas and the cities of Houston and Dallas. Analysts predicted that falling fuel prices and market conditions would cause a downturn. However, in reality, these cities have remained steady for investors due to overall job growth and housing market expansion.
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