6 ways to build wealth in a HOT Real Estate Market

Jon Hazeltine
Published on May 13, 2016

6 ways to build wealth in a HOT Real Estate Market


When the Market is hot, everyone is excited, and opportunities to build wealth abound! Sellers can expect multiple offer on their homes, and buyers know that they need to move quickly, offer above the asking price and watch out for bidding wars! Generally speaking, a hot market is a sellers market, which means things are easier for the seller and more difficult for the buyer. However! A market doesn’t get to be hot unless a lot of people want to buy in a particular area, so at the end of the day, buyers will eventually find themselves living somewhere desirable!

One of the things aI love about real estate, is that there are multiple ways to build wealth in every kind of market for those who know how to do it. So today, I am going to go over 6 methods that you can use too build wealth in a sellers market!

Build Wealth by Selling and Renting –  There are few better moves in real estate than selling high and buying low. It takes some flexibility, but if you can sell at the top of the market and then rent for a year or two, you can save up to 20% in a healthy market. If it’s 2008…… well…. I bought a 180k house for 45k. Crazy Times.

Build Wealth through FSBOS –  (For Sale By Owner)’s When the Market is hot, FSBOS don’t heat up as much. If you can find one that you like, the odds of getting into a bidding war are substantially lower. You will still end up paying more than you would in a buyers market, but the competition for FSBOS in a sellers market is just not as fierce!

Build Wealth buying Cheap Houses  – The principle here is used in the last step as well. The idea is that housing prices tend to fluctuate on a percentile basis. If you buy less expensive housing when the market is hot, and then the market declines by 10% the impact will not be as severe and you will be well positioned to take advantage of the next upswing.

Build Wealth by Selling your Extra House –  I realize that this step won’t work for all of you who haven’t completed this step! But – for those of you have done this, and this, then this idea is the juiciest plum of them all! The single biggest argument for owning multiple pieces of property is that it makes it very easy to surf the housing market when you have an extra house laying around!

Build wealth through Monster Flips – What is a monster flip?  A monster flip is term that I use to describe a property that has monster profit potential. I am talking 50% These houses are usually monsters in another sense. They are smashed up, ugly, falling down, moldy, leaking, burned, and otherwise nasty places…… with incredible potential. These houses are so undesirable that they have been unaffected by the hotness of the market! But …. you are fearless. You know the right people, and you have the right skills (not construction skills) to handle this kind of house! Even though it’s a monster, we want to flip it quick so that we can resell it and take advantage of the hot market before it turns!

Build Wealth by Selling and Downsizing – The top of the market fluctuates at close to the same percent as the bottom of the market during a market swing. If you own a high value home, you can take advantage of this by downsizing. Here is how it works!

  1. Step 1. Sell Your High Value Home (Let’s say 500k)
  2. Step 2. Buy a Lower priced Home (Let’s say 250k)
  3. Wait for the Market to adjust. (OH NO! Breaking News –  Market declines 10%)

At this point, the owner of your 500k house has just lost $50,000 dollars. (Good thing it wasn’t you!) However – – You bought a 250k house which means that you just lost $25,000 in value! (Imagine if you had moved into a 100k fixer upper) Most people will simply wait through these swings for value to come back up, but not you! You are surfing the housing market!  Here is the next step!

  1. Step 4. Sell your house! (WHAT?) and lose $25,000 dollars? EXACTLY! You now have 225k in your pocket from the sale of your home PLUS 250k left over from the sale of your previous home AND you have the mortgage savings that you gained from living in a cheaper house for a year!! We will call that 15k in savings which gives you a total of 475k.
  2. Step 5. Go buy your old house or another house like it! Remember – The market is still down 10%, so you can pick up your old house for only 450k! At this point, you are living in the same house you were in a year ago but you’ve got an extra 25k in your pocket!
  3. Step 6. Wait for the Market to turn. Eventually the Market will rebound. It always does. This time around, when the house that you bought for 450k goes back up to 500k, you will be sitting on 50k value in your house plus 25k in cash. That’s 75k just for moving some boxes.

This is just a few of the techniques that can be used to build wealth!


6 ways to build wealth in a HOT Real Estate Market
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