Lots of people ask me “when is the right time to buy property?” Well, the truth is, anytime is a good time to buy property. However, just because it’s always the right time doesn’t mean you can’t lose money on real estate. Real estate, like other investments, carries a certain element of risk - otherwise it wouldn’t be investing! What makes real estate investing risky? Buying bad properties. Bad properties are bad properties- it has nothing to do with timing.
People ask “Should I buy property in this sky high market or should I wait for it to turn around or hit rock bottom?” Timing the market is impossible. No one really knows what it’s going to do. However, you can find a good deal in any market and a good deal is always worth buying.
I learned about real estate early because I come from a family of real estate investors. Whenever there are big family events, we always play Monopoly quite competitively. It’s not just a game to us; we do it to prove how good we are at investing in real estate.
The secret to winning in Monopoly is just like the secret to winning in life with real estate; although you cannot time the market it is about timing.
Wait! Before you say “huh?’, let me explain. If you buy real estate early in the game (and in your life) you will most likely come out ahead. So you should never wait to buy real estate.
Here’s the caveat though - when you play Monopoly, what do you do? You open up the box, and read the starting line which states “The Objective of the Game is to Become the Wealthiest Player Through Buying, Renting and Selling Property”. Then, you probably pick your playing piece, roll the dice and get going. If this is how you play, you’ve skipped some critical steps in the process. You may succeed, but your chances of failure are higher than your chances of success.
Just like you wouldn’t play Monopoly without knowing the rules, you should not start investing in real estate in real life without knowing the ‘rules’. Do you know what your objectives are with real estate investing? Once you know your objectives, then you can start doing research to see which properties meet them.
A property that meets your objectives will most likely provide steady rental income that can carry the property in times of economy fluctuations. If you find such a property, buy it and hold onto it, using the extra rental income to finance other real estate purchases.
In Monopoly, the most desirable piece of land is Boardwalk. Sometimes people don’t spend any money in Monopoly because they are saving it all for the chance to purchase Boardwalk. However this is a mistake- while you hold out for Boardwalk, other players who bought other properties early in the game are making steady income. If you wait for the perfect ‘landing spot’ or the perfect market, you’ll find that it might be too late to get in the game.
Although Monopoly and the real-world real estate market can seem totally random, they are not. The market has little to do with whether or not you lose money. It’s possible to lose money in a good market and make money in a bad market. Most of this is decided by how much people decide to research before purchase.
The secret every real estate investor should know about timing the market is comprised of two parts. The first part is that now is always the best time to buy real estate IF, and here comes the second part, you can find properties that will carry themselves through bad times.
Of course, today’s market is the perfect time to buy real estate. Interest rates are low, sellers are motivated and prices of homes have come way down. But even if you don’t buy a property right now, just remember what to look for when you do buy a property (one that pays for itself) and that NOW is the perfect time to buy. If you keep these things in mind, you’ll always come out ahead in the real estate investing market.
Tags: buying rental property, Finance, investing, money making, negotiation, personal finance, property management, real estate, real estate investing, Wealth