Free Helpful Real Estate Cycle Tips

In some locations, you achieve peak rents only if you get your properties rented within a window of opportunity. In most college towns, vacancies in August typically rent faster and at higher rents than in, say, November or June. In Sarasota, Florida (and other winter vacation spots), December may prove to perform best.

In April, the snowbirds have left and vacancies proliferate. In the Hamptons, the summer brings top rents. But you better have your leases signed by spring because in May and June, owners feel desperate and slash their asking rents. On occasion, in extremely tight markets, you can extract premium rents after the period of peak activity ends. In those cases, because virtually all properties now have tenants, those rare vacancies that do occur may be able to take advantage of their scarcity providing that the market still includes many renters looking for a place to land-after the music has stopped.

The moral: Know the timing of the markets where you own properties. Some areas cycle through peaks and valleys every year. If your window of opportunity is closing, cut rents sooner rather than later (or change your value proposition). Build equity fast when you recognize how to collect more rents from an existing property. But to really accelerate your wealth building, create value for your properties and your residents through various improvements and changes. Frequently, you can bring in more rents, cut expenses, and lower a building's cap rate-all at the same time. By simultaneously achieving all of these goals, you can jump the value of a property by 30 to 40 percent within a period as short as 24 months. But you must work for this reward.

Too many investors are chasing (and will continue to chase) too few good properties. I have searched for income properties primarily in Florida, but also in other areas of the country. The only instant equity deals (that is, value creation through quick rent increases) that I've found are in low- to moderate-income properties. Although I have earned huge returns in the low to moderate market, these properties no longer fit my objectives. (Nevertheless, I still believe that these properties make a great starting point for beginning investors because they yield high cash flows and often sell at affordable prices.)
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