When is the absolute best time to get started in real estate investing? Some people, especially those that think they really understand economics, choose to start when they think it is the perfect time in the marketplace. Oftentimes, those are the very same people that sit on the sidelines while the doers of the world are busy closing deals and making money with real estate investing. Others dive right in, head first, and don't give any intelligent thought to what they are doing. Obviously, neither of those approaches are optimal. Instead, here's the best time to get started investing in real estate as well as why:
Don’t Miss Investing Opportunities
About two years ago I was corresponding with an Economics Professor for a leading University in Canada. He was telling me that from all the economic indicators, he had concluded Canada was heading into a massive crash. Therefore, he was waiting to invest until that real estate market crash, and he kept waiting and waiting. At the time we were corresponding, he had been waiting for eight long years for a crash that hadn't come yet. What that meant was he sat on the sidelines during eight amazing years of real estate investing opportunities. The point is, you can not fall into that trap. I call it the broke, know it all trap, and you need to stay out of it.
The Broke Know It All Trap
If you are smart enough, you can make money in any market conditions whether they are up, down, or sideways. We've been making money for twenty years, my apprentices and I, no matter what the market's doing. If you stay on the sidelines, you're wasting valuable time. Stay out of the broke, know it all trap.
The Best Time to Get Started Investing in Real Estate
As soon as you can, providing you apply:
- The right education
- With the Proper techniques
- At the correct times
I don't want you to jump blindly into anything, but as soon as possible, that's the time to get started. Unless you have some personal crisis holding you back, you need to get started now because that brings you one step closer to you reaching your goals.
1. The Right Education
I have discovered that it's better to start part-time. Starting part-time for beginners is ideal, so don't feel like you need too much time on your hands. I have a video called Can Real Estate Investing Be Done Part Time Successfully that you can watch. If all you have time for is watching my videos, all the better, then you can get the right education. As you can tell, I have a lot of great resources. I have assembled my best content along with some other resources and put it into a ten hour video training course on Creative Real Estate Investing. You can get access to it for free. There's a lot of resources in there and it will take you in-depth step by step, exactly what we do and how we do it.
Some people may think this is self-serving, and that I’m trying to make money selling books and videos. First of all, my book, How To Be a Real Estate Investor, I give away for free and there's also a copy you can get for free in that video course. My YouTube videos have no advertising on them, so I have the right motives here. I'm trying to teach you in the best way I can exactly how to be successful in today's market. I'm passionate about it.
2. Proper Techniques
What we're applying right now is the quick in and out flip model. We’re not sitting on a house six, eight, or 10 months. We're getting in and out in a month or two because we never know what the market's going to do.
If we're doing rental property, we're focusing on cash flow.
3. The Correct Times
At any moment in time in the real estate market, it can be the best of times for some and it can be the worst of times for others.
The Worst of Times for:
Right now, it's the worst of times for traditional investors. They are getting squeezed from every direction because of:
- lack of inventory
- far fewer foreclosures than in the last 20 years
- competition with iBuyers
With the lack of inventory, traditional investors are fighting for whatever scraps are left. They are also competing with some large institutional buyers. These ibuyers are coming in and buying huge blocks of houses. Being a traditional investor is very tough right now. There are more traditional investors than there are deals.
Other people are struggling right now as well. If you're a home builder and building homes in that upper middleclass price point, there's a lot less demand than there is supply in most parts of the country. The builders are struggling to build homes in affordable price points. It's not just the cost of land, but also the cost of materials. Government bureaucracy is making it more difficult, lengthier and more expensive to build a home.
Perhaps the most expensive problem right now for home builders today is the cost of labour. We're at very low unemployment rates right now, and there's not a lot of people going into the construction field. Builders are struggling to get quality labor and they're having to pay through the roof for it, no pun intended.
It's the worst of times if you're a speculator right now. If you just simply want to buy a property, sit on it, and then resell it two years later you’re probably not going to get the same appreciation rates that we've seen the last six years.
The Best of Times for: Creative Real Estate Investors
My apprentices and I are crushing it right now because there is an affordable housing crisis in America and we are a capitalizing on that crisis.
House Flipping in the Current Market
They did a recent study on the current home buyers market in America, and over 50% are looking for a home under $200,000. Meanwhile, the median list price of a home in America right now is $300,000. Do you see the gap? The majority are looking for houses $100, 000 less than the median price point. It's an affordable housing crisis. We’re focusing our marketing for sellers in that affordable price point range. Because we are getting off market deals, we don't have the same problem that traditional investors have.
In and Out Flip Model:
We're going after off market deals and getting those locked up. A lot of times we're doing creative techniques to give the homeowner even more money. However, we're doing it without having to deal with hard money lenders and their costs. We are also skipping out on the risk of paying all cash and then we're turning and reselling these properties. Sometimes we fix them up and sometimes we don't. We have a multiple offer situation almost every single time because we're in that affordable price point.
As soon as you get up to a higher price point where there's a lot more inventory right now, that's when you get into trouble. God forbid you try to do a deal on a large home in the Southeast right now. There are areas with entire neighborhoods that are all up for sale because the baby boomers are moving out. They want to get into a smaller property or they're moving to Florida or wherever. They are trying to sell their six bedroom, and no one is buying.
So, it can be the worst of times, but it can also be the best of times. We're making a fortune right now, but we know where to focus and that's so key. Applying proper techniques at the proper times. Affordable housing is where all the money is being made right now.
Rental Property in the Current Market
What about real estate investing long term and rental income? I have a video on how you can buy rental property at the top of the market and still win big. This is because with rental investing your time horizon should be forever. If your time horizon is forever, then your focus should be on cash flow, not on whether it appreciates or not. I don't care if my rental properties go up or down in value. What I care about is how much cash flow they're producing. I have properties that are producing over 50% cash on cash return, so I don't care what the market does or doesn't do.
Focus on Cash Flow
Cash flow needs to be your focus if you are investing in rental property. I'm a huge proponent of short-term vacation rentals, because the cash flow is so great. What I believe is that if you focus on recession proof areas of the United States, you can have a short-term rental that will last into perpetuity and is going to cash flow like a freight train. What's exciting too is that Airbnb, HomeAway, and TripAdvisor are gobbling up more and more of the market share away from the hotels. It's only getting stronger as a business model. The more people stay in homes, the more they tell their friends. The next thing you know, people are not staying in hotels as much anymore when they travel. They're staying in single family homes at an Airbnb, HomeAway or TripAdvisor vacation rental.
Whether you are house flipping or investing in long term rentals, the best time to get started investing in real estate is as soon as you can.