Is It Time to Buy an Investment Property?
There are a lot of people who want to buy an investment property right now. It could be their first, or maybe they have others. They’re sitting on the sidelines, however, and often with the hope there will be a “crash” of some sort.
Properties are incredibly expensive right now, and if you’re an investor or would-be investor, there’s the question of whether or not buying now might leave you with a property that’s worth half of what you paid for it in a few years. It’s a real risk, and it’s something to consider.
The first thing you have to remember is that even though the real estate market is hot and competitive right now, there may not ever be the crash you’re looking for. The market could slow down, but that doesn’t necessarily equate to a crash where you’re going to get amazing deals.
Yes, it can happen, but it’s like trying to time the market when you invest in stocks—there are no guarantees there’s ever going to be a time that feels right for you. here are some other reasons you might want to get into the game and off the sidelines right now.
If You Buy Now, It’s Easier to Buy Later
If you buy an investment property now, you are concerned that the market will crash. If you wait to invest in rental properties, though, you have to remember that lenders will tighten things up as a result. They’re not going to be as willing to lend money if there’s a recession. Yes, prices might be lower, but funding is harder to access.
If you’re a new borrower, the chances are pretty low a bank will extend funding to you.
Suppose you’re an existing landlord, and you already have a history of being a real estate investor. In that case, you’re more likely to get funding, even if there is a recession or economic downturn. The more you can show a history that you’re a successful, reliable property manager, the more opportunities you’ll have to continue earning in the future.
Prioritize Cash Flow
If you’re trying to time out the purchase of a rental property, you might be playing a losing game. Instead, rather than doing that, you want to have a plan, and that plan should center on investing for cash flow instead of capital appreciation.
The idea here is that rather than buying a property and waiting for it to go up in value, you’re using it for steady income.
Rent often remains stable even during recessions because a lot of people who did have homes might sell them or have to foreclose on them due to changes in their financial situation.
Every Location Has a Unique Economy
You might be following the headlines and hope you can time things to get a deal on investment property, but in reality, every area has its own unique real estate market and economy. For example, properties might be completely overvalued in some places, but they have bottomed out in other locations.
Rather than sitting on the sidelines because of national headlines regarding the real estate market, it’s a good idea to understand what’s happening in your local market.
You might be able to find a property with good fundamentals that’s undervalued in the current market if you do your research and think small in terms of the local market.
So what’s the takeaway? You can invest in a property that will be a good buy for you even when the market is hot. Trying to wait out certain larger macro trends isn’t a good long-term strategy for any investor.