Buy cheap, sell for more
Cryptocurrencies
For once we won’t start with real estate, but talk about cryptocurrencies for just a minute. What’s the biggest lesson that we can learn from the cryptocurrency bubble? Buy cheap, sell for more. Easy, right? Below you can see the evolution of Ethereum, one of the main cryptocurrencies, since early 2018. As you can see, no need to be an expert analyst to understand that there are moments when you should absolutely buy, and moments when you should absolutely sell. And this isn’t true just for cryptocurrencies, but also for the stock market in general, and for… real estate of course.
Real estate and cryptocurrencies: a potential comparison?
Be a counter-cyclical investor. Have you ever heard of Blackstone, the American fund which now possesses 20 billion euros worth of Spanish real estate? Well, Blackstone has progressively become one of the real estate giants in Spain through major transactions, coming after the crisis. As you can see below, the curb of the Spanish real estate prices is yet another very standard curb. Just like the Ethereum, it went up, then down, and finally getting back up.
What if you considered real estate just like you consider the stock market?
Despite the fact that you may not have billions to invest like Blackstone, or a strong team of analysts like they do, it is possible to identify the real estate markets in which prices won’t go up (or will go down soon), and the ones which should go up soon.
Most of you probably heard about GoogleTrends already. While this tool enables you to search for popularity of searches, you may also consider that it’s a good indicator of supply and demand. If a term is increasingly looked for, shouldn’t it indicate that prices will go up?
Go where it’s cheap now
Consequently my biggest advice is to be analytical about real estate acquisitions, in the same way that you are with stock market acquisitions. More importantly, even if it feels counter-intuitive, become a counter-cyclical investor. Therefore, you should look for depreciated real estate markets, because that’s how you will get strong return on investment over time.
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