WEEHAWKEN, NJ – SEPTEMBER 22: The sun sets on the skyline of midtown Manhattan, the Empire State Building, and Hudson Yards in New York City, as seen from Weehawken, New Jersey. (Photo by Gary Hershorn/Getty Images)
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When investing in real estate, it may seem that timing is everything. In reality, some of the most successful investors play the long game. They might buy and hold an asset for decades or decide to never sell. Or they might choose to diversify their portfolio to manage exposure. If you’re looking to learn about cycles, it can be helpful to keep a long-term view and work with the right professionals to get the Insider’s Edge.
1. Prioritize Decades Over Quarters
Real estate tends to move in waves, and headlines often feature the latest shifts. Rents can increase, capital may fluctuate, and local neighborhoods might change. Some investors will choose to sit on the sidelines during certain market movements, waiting for the landscape to shift in their favor.
Long-term thinking starts with recognizing that every asset class will go through different ups and downs at some point. Industrial might be the star of one cycle, and then multifamily demand could pull ahead for the next. The investors who win are the ones who view cycles as temporary and avoid the risk of overleveraging.
That means underwriting beyond the next headline. Instead of looking at the current rates, you might also investigate whether the property will be able to perform if growth stalls or vacancies rise. You can build flexibility into your business plan to manage different possible outcomes. The best opportunities might come through when others are hesitating, as a contrarian move could work out to your advantage over the long term.
2. Keep Building Your Knowledge Base
To be able to make informed decisions, you’ll want to thoroughly understand your market and neighborhood. You can take a close look at data and study factors like demographics, job growth, and population trends. There’s also value in walking the streets and meeting the people in the area. As you visit neighborhoods, you can talk to superintendents, local shop owners, and residents to get the latest information.
You can keep track of your findings on a spreadsheet and use techniques to source deals in the area. By updating records of what properties are available, what’s selling, and which investors are transacting, you’ll be able to monitor changes and spot opportunities. Working with brokers in the area will help you stay informed as well.
3. Consider Diversifying Your Portfolio
If you’re starting out in real estate investing, you might be looking for your first partner and property. Over time, you can consider branching into different asset classes. Many of the most successful investors diversify across property types to balance risk and manage cycles.
For you, that could mean beginning with a stable cash-flowing asset and then taking on a property that you plan to reposition. You can work with investors to make decisions on which property to add next, and bring in additional partners as you scale.
Just as important is knowing what risks to take. You can manage costs and operations, but you won’t have as much control over political adjustments or macro shifts. Every investor has to decide what level of risk they are comfortable with and opting for slow and steady growth may be a smart move for the long game.
While real estate cycles are inevitable, the key is to manage them well by staying informed and making decisions that keep a long-term view. If you base your decisions on real data, and stay flexible through each phase, the ups and downs will become less of a threat and more of an advantage. The investors who outperform the market aren’t always those who move the fastest, they’re the ones still standing when the cycle turns back in their favor.