Timing’s the key in an ever changing market

Saturday, May 22nd, 2004

Ozzie Jurock

In my 1999 book Forget About Location, Location, Location, I argue that we are too enamoured with that time-old phrase.

Yet, as with practically everything else in life, timing is everything. In real-estate investing, the degree to which your timing is accurate is the degree to which you will achieve optimal or minimal results.

So you say, ”Good! I will learn what I have to learn about timing and then I will know how. Where do I start? What are the rules?”

This brings us to our first problem. There is no particular place to start and there are no rules.

There used to be rules. It used to be easy. If you could learn to recite, ”Location, Location, Location” from memory you were automatically a real estate expert.

You simply had to find out where the most desirable part of town was, or where the most desirable suburban or rural area was, depending on your interest, push a pin into the map at that spot and then go and buy something as close as possible to where the pin was.

Timing wasn’t important because the dynamics never changed. But now, Location means little and Timing is extremely important.

When you look at any market you are looking at a snapshot in time. That’s the way it is at that moment. In a month or a year, it might be very different.

One of the problems we have is our education. All of our teachers prepare us, regardless of what the subject is, for a world that is not going to exist by the time we get to it. They take a snapshot in time of the world as it is in the present and they prepare us for that. When we go to use that information we find we’re in a different world

If you are in an inflationary real estate cycle, the rules are relatively simple. You buy a piece of property utilizing leverage, you wait a certain amount of time for the property to appreciate, then you might sell for a profit and buy something larger or you can borrow on your increased equity and buy something in addition. What could be easier?

However, if you’re in a flat-line segment of an inflation cycle you have to buy below fair market value to establish your profit at the beginning. You have to give greater importance to cash flow considerations.

But what happens if you buy in an inflationary cycle and then it turns flat-line? You have to shift your focus every time the market changes. Because, like riding a rodeo bull, every time the bull does something different you have to change your position or you’re going to be thrown.

So, there are no rules because the marketplace is continually changing. Therefore what we have to do is learn to read the changes, interpret what the changes mean and adapt to them

What are the determining factors? Here we come to some good news.

The component parts, the determining factors, are not complex or difficult to deal with. You look at migration, affordability, inventory availability, inflation and environment of growth.

You can gather your facts from wherever they are available but after you’ve done that you have to form an opinion.

This isn’t like religion where you decide on a moral philosophy and then go out and carve it in stone. This is an ever-changing continuum, a soup that is boiling and bubbling and nothing is ever where it was the last time you looked.

The difference between ”too soon” and ”too late” is timing! If you watch the trends as they change you’ll be able to time your actions for optimum results.

So, you must watch for changes. How does the average person learn to read them?

How is someone supposed to know when the changes are coming?

The changes are heralded by a change in the numbers in the statistics. Trends continue until they change and you can read the beginning of those changes in the statistics. However, often by the time you see a report on the changes, those changes have already occurred.

What you have to do is go upstream from the “news” and go directly to the source of the numbers — to the real estate boards, the Canada Mortgage and Housing reports and studies — and get the news while it’s still new. If you’re Internet-literate you can go right to the web pages involved and be right in on the beginning.

Having said that, can the experts really help us? Well, remember, even the experts are only guessing. Futurists are never right except by accident. Historians are never wrong. If you had tomorrow’s newspaper you could make millions; if you have yesterday’s newspaper you can wrap fish in it.

Except, contained in yesterday’s newspaper are changes that have already started and if you get to them soon enough, interpret them correctly and then act on them, you can do yourself some serious good.

It’s not necessary for you to have the entire wisdom of the world at your fingertips. But get good quality information, know who you are — a shark, a flipper or an investor — pick your market segment, pick your professionals and don’t get emotional. You will always make the most money on the day you buy.

Ozzie Jurock is the publisher of www.Jurock.com, an independent real- estate advisory service. Telephone 604/683-1111 or e-mail:

© The Vancouver Sun 2004

Comments are closed.