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4 Market Phases You Must Know For Real Estate Investing in 2020

If you’re new to commercial real estate, or investing in real estate period, you may not be aware that there are four market phases that you need to get to know quite well. Fortunately, they aren’t difficult to understand, but they play a tremendous role in what’s hot, what’s not, and what type of real estate is successful at what time. Many new business owners or investors may not take the market phases into consideration, but you’ll find you will understand the market and make sound business decisions when you do.

4 Market Phases You Must Know For Real Estate Investing in 2020 

  • Recovery
  • Expansion
  • Hyper-Supply
  • Recession

Recovery, or Phase One, is when there is no new construction happening and declining vacancy. It can be difficult to secure a business loan when the market is in this phase, but this is a phase that most areas of the country are not in, or emerging from. Many new investors are afraid to invest during this phase, but with a good financial planner and some good demographic data and study, you could potentially do very well during this phase.

Expansion, or Phase Two, is where many markets hover – one of them being multi-family units, and there’s no real sign of that ending because the United States has become a nation of renters, particularly in some locales. This is again where you need to pay special attention to demographics and know a little something about how generational attitudes affect the real estate market. Baby boomers and Millennials are more likely to rent than Generation Xers, who are more likely to buy a home. Get to know your area’s demographic as well as you know a family member. If you’re in an area of many Baby Boomers (Florida in general may fit here), multi-family unit investment may be a great business venture.

Hyper-Supply, or Phase 3, is generally happening vacancies abound, but new construction continues. This is generally not a great time to buy or build commercial property. Take a careful look at your locale at understand that a failing economy can have a tremendous hand in keeping a market at this level. Understand that just because the economy is doing better on a national scale may not mean the local economy is. Did a major supplier of jobs just shut down in your area, such as a large factory? If so, you may see the local market quickly fade into Hyper-Supply, no matter where it was before.

Recession, or Phase 4, means there’s not a great cash flow and it’s going to hit the real estate market hard. Properties can lose value, vacancy rates are increasing, new construction comes to a halt, and Wall Street may not be doing very well. True national recessions happen rarely, but local recessions are common to areas at different times for different reasons. It’s still possible to invest during his market phase, but it usually takes someone with quite a bit of experience to navigate it efficiently, and you must know the particular market you’re dealing with.

This is a very brief synopsis of introductory to market phases, but investors should understand that they exist and are important. They are definitely worth studying and understanding if you want to do well with investing in commercial real estate.

 
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Newest Key West Commercial Properties on the Market

Built in 2007, this commercial, mixed-use property is situated on White Street off of Elgin Lane very close to Eaton Street and minutes to the Historic Seaport. The current commercial tenant is using the office space for chiropractor services. As you enter the front door, the current layout is as follows. A waiting area and enclosed front desk greet you. To the left of the waiting area is a private windowed office. As you continue into the space there is a treatment room to the right and a supply room to the left. Either of those rooms could easily be transformed into another office. Further on there is an efficiency style kitchen and an ADA compliant bathroom. A set of floating desks lies beside the kitchenette. There is the possibility here for 4 offices and a floating workspace. The property offers 3 off-street parking spaces for the business including an ADA compliant spot in the back of the building.  A private entrance in the rear of the building will lead you up a flight of stairs to the two one-bedroom, one bath units. Each unit offers a small kitchen and loft area. These apartments are in the affordable rental pool. ($1,600 each per month) Great place to live and work! $1,150,000 Active

412 White Street 101 KEY WEST, Florida

2 Beds 3 Baths 1,513 SqFt

Ideal Small Commercial Space for Lease in Old Town.  Excellent location next to the laundry mat on the corner of Eaton and Elizabeth Street's. Perfect for small retailer or business professional with approximately 500sq.ft. of space and street visibility. $2,950 Active

627 Eaton Street down KEY WEST, Florida

1 Baths 500 SqFt

Perfect private office space with windows available for lease office 214 is approx. ~162sf, perfect for two+ desk. Join the friendly business environment catering to a diversity of local small business owners located the 626 Josephine Parker Office Suites in Old Town Key West. Common area breakroom & restrooms, electric and water included. Sales tax is in addition to the monthly rent quoted. Parking is assignable and $150 in addition to rent each month. $1,000 Active

626 Josephine Parker Drive 214 KEY WEST, Florida

2 Baths 162 SqFt

Very rare opportunity to own a piece of Key West History! The iconic Coffee Mill in Old Town, Key West is one of the most recognizable buildings on the island. Built prior to 1907, the property was home to an active coffee bean processing plant until the 1950's. In recent years, the building was famously home to one of Key West's most popular dance studios -- and now is being used as a holistic medicine and wellness center. The current owners have done extensive renovations to update the space to today's standards while maintaining many of the historical features of the property. Updates include a complete modernization of the electrical and plumbing systems, new central A/C and ductwork, masterful restoration of the original hardwood floors, and the construction of private treatment rooms and a business office -- all while preserving the original exterior and character of the building. Additional features include multiple skylights, a period correct metal shingle roof, beautiful historic arched transom windows salvaged from Henry Flagler's Casa Marina hotel, and an updated bathroom. The property is up to current building code and ADA compliant, and was awarded a Ceramic Star for historic preservation and a Certificate of Excellence by The Historic Florida Keys Foundation. The Coffee Mill has been a staple in Old Town for over 100 years and continues to be an important part of the historic district. Commemorating its roots, a section of the milling equipment has been preserved and is on display in the main room of the Mill. Located just steps from world famous Duval Street and walking or biking distance to the island's best restaurants, shopping, and galleries. If you're looking for a space that's as unique as Key West itself, look no further than the iconic Coffee Mill. Easy to show! $1,000,000 Active

916 Pohalski Street KEY WEST, Florida

1 Baths 1,256 SqFt

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Posted in: Business Loans, Business Solutions, Buyers, Buying Commercial Real Estate, Environmental Concerns For Businesses, Owning a Business, State of Florida Tagged: 4 Market Phases of Real Estate, Florida Market Phases, Knowing The Market Phase of Commerical Real Estate, Market Expansion, Market Hyper-Supply, Market Recession, Market Recovery, Understing Your Real Estate Market, Why MultiFamily Units Are A Safe Investiment

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