Looking To The Past And Future For Investing

When it comes to reassignments or quick flips, which would be the real estate equivalent of day trading on the stock market, you are looking micro level trends on a small time frame to make decisions. But what if you are looking to hold a property for months or years, where should your mindset be?

When you are looking at the current real estate market and wondering why anyone would want to invest in right now, you are looking the situation reactively. This is generally backwards from proper investment thinking.

The key to investing with any vehicle, be it stocks, bonds, commodities, real estate, or anything else is be looking to past for answers and the future to evaluate possible outcomes.

If you look to the past you can see that no trend in real estate continues forever. This means at some point the market will change direction. There are areas that didn't get hit like most of the market, and there are areas that look to be rebounding. But assuming your investment area fits into the trend of the nationwide trend, you should be considering what factors in the future can attribute to the change of direction. These factors can on both local and national level.

I'm going to give you an example for the sake of argument of how thinking about these things can put you ahead of the curve. This is not designed spark any type of political debate, or infer any real world outcomes, just as a way to analyze different situations.

Take the 2008 presidential election that will be coming up in no time. All the candidates have been asked about their ways to deal with the foreclosures. Each has a plan, but there is one that could have more impact for investors.

One candidate had said their plan would involve temporarily freezing foreclosures and interest rates. Now whether or not that would be viable economic resolution, whether or not that candidate will become president, and all the rest is a debate for another time and place.

However, for sake of argument, let's say such a plan were to happen. How would that effect the market? Would a lower supply of foreclosures give the market a bounce? Would that mean the low lying fruit would all be picked, and not investors and deal seeking buyers wouldn't have as much opportunity, and that will increase home prices?

These questions probably can't be answered with any type of certainty, but they are the type of things to you should be keeping an eye on and thinking about how they could play into your hand.