Choosing A Real Estate Market: All You Need to Know
TL;DR - There are three real estate market types. Cyclical markets are volatile, linear markets are steady-growth, and hybrid markets are a mix of the two.
Once you’ve figured out your finances and saved up enough money, it’s time to invest in real estate!
But where do you begin?
The first thing you’ll need to do is choose the type of market you want to invest in. This will help you narrow your focus and energy.
Now, you might be saying to yourself, “wait… there are types? Plural?”
Yes! And that’s why we’re giving you all the information you’ll need to know about them.
Choosing a market
What They Don’t Tell You
The thing about getting advice on real estate markets is that a lot of experts leave out the most important information.
This may come as a surprise, but it’s true.
The experts and pros will tell you all about what to look for. Things like population size, job opportunities, education systems, and the like. All of which are important.
But they don’t tell you about the three different types of real estate markets.
Why? I couldn’t tell you. But I can tell you that knowing the difference between these three markets is making money and not making money.
The Three Types of Real Estate Markets
Each market type has its own set of pros and cons. We’ll give you a brief overview of each one, as well as cities that can be found in them.
Cyclical Markets
This market type is notorious for being boom or bust.
Why?
Because appreciation rates in these markets look like a rollercoaster. They rise for a bit, then drop just as quick.
You can never really predict when the market will trend upward and when it’ll crash.
So investing in this type of market is practically equivalent to gambling. You’ll either win big or lose big.
Your main strategy for investing in cyclical markets is to buy low and sell high. Like a stock day-trader. So if being uncertain about your investments is your forte, then cyclical markets might be for you.
These markets are the most talked about ones. They grab the headlines and get the attention.
Where Can These Markets Be Found?
Cyclical markets are normally found on either US coast (East and West) and parts of Florida (especially South).
Some cities, for reference, would be: Los Angeles, Portland, Seattle, New York, Boston, and Miami.
Linear Markets
These markets are much more consistent.
Real estate appreciation in linear markets trend in a more “flat” growth pattern.
While you might not experience the amazing highs present in cyclical markets, you won’t experience the overwhelming lows either.
This means that you can invest in a property and feel safe that you’re making money the longer you hold it.
Linear markets also provide awesome cash-on-cash returns, as well as great capitalization rates.
Most of the world is a linear market.
Where Can These Markets Be Found?
Linear markets are typically found in the Midwest, South, and South-East.
Cities for reference are: Indianapolis, St. Louis, Columbus, Houston, Savannah, and Memphis.
Hybrid Markets
As the name suggests, hybrid markets are a mix of both cyclical and linear markets.
They will have slow-growth for a time, then have a period of sharp appreciation shifts, then go back to slow growth. Rinse and repeat.
Hybrid markets won’t be as volatile as cyclical markets and they won’t be as safe as linear markets.
Where Can These Markets Be Found?
Hybrid markets can be found in big cities that aren’t on a coast or near the ocean.
Cities for reference: Chicago, Minneapolis, Detroit, Phoenix, Las Vegas, and Austin.
Best Market to Make Money?
That’d be linear markets. Why?
Because, with a long enough time horizon, they pretty much guarantee appreciation. When you invest in a linear market, it’s essentially money in the bank.
You don’t have to worry about buying low and selling high. You can buy whenever and watch the slow, but steady, growth.
They’re a stress-free investment that’ll produce passive income. And who doesn’t like that?
Our team at Undoor loves linear markets and we know you will too!
How We Can Help You
Does investing in real estate sound intriguing to you? Would you like to learn more? We’d love to be of value!
At Undoor, we pride ourselves on teaching new and experienced investors how to maximize their gains with minimal stress. Our goal is to help you fall in love with real estate and real estate investing. What we’re most passionate about is maximizing investment gains for people like you.
Do you want to get key insights and advice that’ll help you get ahead of the game? Don’t hesitate to contact us for any and all real estate wants or needs.
