The sophisticated investor forces change by using strategies that add value. An amateur investor banks on market change. The sophisticated investor knows how to make money in any market, while speculators starve in a down turn. Creating value is done through diligent action. You’re optimizing the property to its highest and best use. This could be rezoning, a renovation, finding better tenants or creating efficiency in a building just to name a few. Making money in real estate is all about having a proven strategy and managing cash flow. It’s not speculating that the market may rise. This is not to say market timing is not important but it is not everything. In real estate cash flow is everything. You need staying power and you may as well be creating equity along the way by having tenants paying down your debt.
If there was a crystal ball for timing the market it would be to understand inventory and absorption rates. When inventory shrinks and absorption grows that tells us there are signs of a rising market. The opposite is also true, if inventory is growing rapidly and absorption is slow that would indicate a softer market. Develop a relationship with an investment realtor who understands these concepts. Also, study where the jobs are. GDP (gross domestic product) fuels employment, which drives population, which controls the rental market, therefore property demand and subsequently prices. In a nut shell this means that an area with growing employment and in migration will boost an economy.