The Importance of Liquidity in Real Estate

The Importance of Liquidity in Real Estate

Since the beginning of time, the wise use of leverage has made people very rich throughout the world. Leverage has had two major components throughout my real estate career.

  1. Leverage of people
  2.  Leverage of finance for real estate purchases

In real estate, we hire realtors, contractors, property managers, bookkeepers, marketers,… the list continues. The main idea here is to do what you do best and hire the rest of the people to help bring you closer to your goals. It is the unwise use of financial leverage that gets many well-intended investors into trouble, and I’d like to take you a little deeper on why liquidity is so important with real estate.

In 2006, the real estate bubble in Florida was in full force. At that time, the market was ignited by low-interest rates and easy credit which was fueled by investors throughout the country especially buyers from Califonia. At that time I was wholesaling properties primarily in Florida with an emphasis on the Tampa and Sarasota Bay areas. In an average month, we would wholesale 8- 22 houses, this would occur every single month. The buying frenzy was on, and like today’s market, our biggest challenge was obtaining quality inventory.

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