Best time to buy real estate?

There’s a saying, that comes from an old proverb about planting trees… “The best time to buy real estate was 20 years ago.  The 2nd best time is now”.  Everyone is always trying to time the real estate market.  They want to buy when the market is at the bottom.  Sounds good in theory but if you only bought when prices dropped you’d have a VERY hard time building a portfolio.  You wouldn’t have purchased anything in the past 10 years.  And nothing in the 20 years prior to that.

Every purchase I make is specific to the property I am buying.  It depends on the price, the terms, the upside, the taxes, knowledge of up and coming development nearby, rates, rents, how desirable of an area it is, how it fits into the rest of my portfolio, how much time it will consume etc.  And if you’re building a rental portfolio, just because real estate values go down doesn’t mean rents go down.  During the ’08 crisis, rents remained remarkably stable, even going up in some markets.  So make sure you buy using strong fundamentals.  If you’re buying solely with the intent of making money through appreciation…that’s not a good idea.  But if you’re buying because of the cashflow and the LONG TERM prospects then you’re on the right path.

And what a lot of people tend to forget, the real estate market doesn’t need to collapse in order to correct itself.  It could just go flat for 10 years while the economy and inflation grows to catch up with it.  So if you wait for the next down turn you could be waiting a long, long time.  Just be smart with your investments on an individual basis and don’t worry about trying to time the market as a whole.

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