Timing Is Everything In Real Estate And...

Editor’s Note: Hal Cranmer has had a wild past. Born in India, he’s lived all over the world and started his working life as an Air Force Special Operations and Commercial airline pilot. After 9/11 brought him down from the clouds, he entered the corporate world and rose to the level of running a $36M machining plant. Yet from 2006 on, he caught the passion for real estate investing. He flipped a bunch of houses in Minneapolis and still owns several multifamily rentals there. Lately, he is into assisted living, and owns 5 assisted living homes in the Phoenix area. He loves to follow real estate trends, both locally and nationally.

As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Cranmer provides us with his own unique, lively and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out our other super-helpful Market News Updates. For now, enjoy...

From Hal Cranmer...

Timing is everything…

Ain’t that the truth?! Don’t you wish you bought 100 properties back in 2009?

And have them all rented today in a market with sky-high rent?

Or maybe held onto them until now and sold them for a great equity play? (At least until the taxman comes and takes a significant chunk.)

Timing does play a big role in making money in real estate. I want to take a slightly different approach to timing in this Market Update...

Instead of trying to figure out what the megatrends are doing (if I could do that I would be sipping a great drink on my own island instead of working), I thought it would be interesting to discuss shorter timing issues.

Timing Cycles

People do things according to routines.

Many of us:

Wake up in the morning
Go to bed at night
Eat meals at certain times
Celebrate holidays in December
Go on vacation in the summer when school’s out

And on and on...

After looking at a whole lot of data and being in this business for a whole lot of years, it seems like lots of regular people buy or rent real estate at certain times.

Even the commercial real estate market can be affected in certain areas, such as seasonal businesses that need to expand during their busy season. Or businesses may want to purchase or divest real estate at certain times of the year as part of their tax strategy.

What does that mean to us as real estate investors?

I think there are primarily 3 important takeaways:

Selling at a time of peak demand will probably net a higher sales price
Buying at a time of lowest demand will probably net a lower sales price
Same goes for renting

Sell When Everyone Is Buying

As real estate investors, we all want to maximize our profits. Researching the market, buying right and controlling rehab costs are all ways to help the profit goal. In addition, selling at the right time can also make a difference.

And those times are, like everything else in real estate, dependent on 3 factors:

Location
Location
Location

Obviously, putting your flip on the market between Christmas and New Year’s is probably not a great idea.

In most markets, a lot of investors believe that putting a home on the market in the spring might be the best time to attract the greatest amount of buyers, and I found that to be the case when I was flipping homes in Minneapolis.

That is not necessarily true for other markets.

Snowbird areas like Phoenix may see late summer and early fall to be the best time to market a home – when the snowbirds are migrating. Or if you are in an area of endless summer like San Diego, it might not make a whole lot of difference what time of year you sell.

The real estate website Homelight analyzed A TON of sales data and found the time of year to sell varied a lot throughout the United States.

They even came up with a tool that helps you determine the best time of year you should sell according to your location. Below is a sampling of cities across the U.S. and the best month to sell, along with a percentage increase over the average if you list it in the peak month, according to Homelight.

Some of these seem dubious (180% in Detroit?), but it shows timing matters. Maybe on a flip you want to put it on the market as soon as you finish the remodel, but a rental will give you more time to plan the sale for just the right time.

City	Best Month to Sell a House	Increase Over the 2015 Average Sales Price in the City
Alexandria, VA	November	10%
Asheville, NC	July	4%
Atlanta, GA	June	11%
Aurora, CO	June	7%
Austin, TX	November	6%
Bakersfield, CA	September	33%
Baltimore, MD	May	15%
Boca Raton, FL	May	13%
Boston, MA	January	10%
Breckenridge, CO	February	106%
Buffalo, NY	March	18%
Canyon Lake, TX	September	41%
Charlotte, NC	June	8%
Chicago, IL	March	0%
Colorado Springs, CO	December	21%
Concord, NC	July	5%
Corpus Christi, TX	December	55%
Cumming, GA	August	6%
Dallas, TX	June	9%
Denver, CO	May	6%
Detroit, MI	July	180%
Durham, NC	December	12%
Everett, MA	October	10%
Fairfield, CA	September	7%
Fort Lauderdale, FL	April	14%
Fort Myers, FL	June	18%
Fort Worth, TX	February	3%
Franklin, TN	March	10%
Fredericksburg, VA	March	8%
Fremont, CA	May	17%
Fresno, CA	August	6%
Fullerton, CA	October	7%
Greenville, SC	July	150%
Houston, TX	June	8%
Jupiter, FL	September	20%
Key West, FL	February	40%
Las Vegas, NV	June	3%
Littleton, CO	February	13%
Long Beach, CA	June	9%
Los Angeles, CA	June	7%
Lubbock, TX	October	6%
Marietta, GA	June	16%
Mesa, AZ	August	0%
Miami, FL	June	15%
Milwaukee, WI	November	10%
Minneapolis, MN	August	10%
Murfreesboro, TN	December	9%
Nashville, TN	November	12%
Newton, MA	August	10%
New York, NY	August	23%
Norwalk, CT	February	63%
Oakland, CA	December	60%
Orlando, FL	May	15%
Philadelphia, PA	June	14%
Phoenix, AZ	August	0%
Pittsburgh, PA	December	13%
Plano, TX	May	6%
Portland, OR	September	10%
Raleigh, NC	June	6%
Reno, NV	August	0%
Richmond, VA	July	44%
Riverside, CA	December	5%
Sacramento, CA	November	5%
Salem, OR	August	0%
San Antonio, TX	October	55%
San Diego, CA	November	3%
San Francisco, CA	May	11%
San Jose, CA	September	4%
Santa Clarita, CA	November	6%
Scotts Valley, CA	June	23%
Seattle, WA	June	4%
St. Louis, MO	July	9%
Sugar Land, TX	October	40%
Sunnyvale, CA	May	10%
Tacoma, WA	August	8%
Tampa, FL	May	112%
Tomball, TX	October	133%
Toms River, NJ	July	86%
Walnut Creek, CA	January	95%
Washington, DC	May	7%

Can the Day of the Week Make a Difference?

The real estate brokerage firm RedFin also looked at a ton of data...

They concentrated on what the best day of the week is to list your home. It may be important to pick the right day, because internet searches for the home drops off significantly after the first day.

graph 1

That’s because a lot of home searchers and Realtors have searches and automatic notifications set up for homes that meet their criteria. When a new home comes on the market, it’s sent to lots of people. After the first day or two, the hits don’t keep coming.

So which day is best?

The data from RedFin shows that Thursday is the best day for increasing the chances of a quick sale and Wednesdays are best for making the most money.

speed

Price

The theory behind this is that buyers generally tour homes on the weekends but started preparing their search beforehand – on Wednesdays and Thursdays.

The survey assumed that listing your home on a Sunday would be the worst time to list your home, and then it was used as a baseline to see how much more you might make on other days of the week.

Buy When Others Are Partying

Just like springtime, Wednesdays and Thursdays may be the best time to sell…

But the opposite holds true for times to buy.

Looking at homes that were listed over Thanksgiving or Christmas may mean the seller is very motivated to sell. Those times are when competition is the least and the prices may go down.

Obviously as an investor you don’t want to interrupt your marketing at any time, but it may be worth ramping it up during the slow times of the year.

Renting will probably follow the same trends in many areas as buying. You can adjust leases to take advantage of snowbird migrations, school schedules or whatever demographic trends are happening in your area.

To maximize your profits, learning the cyclical patterns of your market may make a BIG difference. It should be a part of your overall strategy.