When is the best time to get started in real estate investing? Some people, particularly those that think they know economics, think you should start when the market is perfect. Often those are the same people that end up on the sidelines while others are busy closing deals and making money with real estate investing. Some dive right in and don’t think seriously about what they are doing. Clearly, neither of these approaches are ideal.
The Broke Know It All Trap
Awhile ago, I was communicating with an Economics Professor for a leading University in Canada. He was telling me that he was waiting to invest in real estate because all the economic indicators were showing that Canada was heading for a massive crash. At that time, he had already been waiting for eight years for a crash that hadn’t come yet. This meant that he just sat on the sidelines and missed eight years of real estate investing opportunities. Don’t fall into that trap. I call it the broke, know it all trap, and you need to avoid it.
The Best Time to Get Started in Real Estate Investing
If you are intelligent enough, you can make money in any market conditions. My apprentices and I have been making money for twenty years, regardless of what the market’s doing. If you stay on the sidelines, you’re wasting valuable time.
The best time to get started investing in real estate is as soon as you can, providing you apply:
- The right education
- The Proper techniques
- At the correct times
Unless you have a personal crisis holding you back, you need to get started now because that brings you one step closer to reaching your goals.
1. The Right Education
Starting part-time for beginners is ideal, so don’t feel like you need a lot of time to get going. I have a video on this subject that you might like to watch called Can Real Estate Investing Be Done Part Time Successfully. And if all you have time for is watching my videos and reading my blogs, that’s great, then you can get the right education. You can also get free access to my ten hour video training course on Creative Real Estate Investing. In it I have assembled my best content along with some other resources and it will take you in-depth step by step, exactly what we do and how we do it.
Some of you may think this is self-serving, and that I’m trying to profit by selling books and videos. First, my book, How To Be a Real Estate Investor, I give away for free and my YouTube videos have no advertising on them. I have the right motives here and am trying to teach you the best way I can how to be successful in today’s market.
2. The Proper Techniques
What we’re practicing right now is the quick in and out flip model. We’re not sitting on a house for an extended amount of time but getting in and out in a month or two because we never know what the market’s going to do.
If we’re investing in rental property, we’re focusing on cash flow.
3. The Correct Times
At any time in the real estate market, it can be the best of times for some and the worst of times for others.
The Worst of Times for Speculators
It’s the worst of times for you if you’re a speculator right now. If you simply want to purchase property, sit on it, and then resell it a few years later you’re not likely to get the same appreciation rates we’ve seen in recent years.
The Worst of Times for Home Builders
Other people in real estate are struggling right now as well. Builders are finding it difficult to build homes in affordable price points. It’s not only the cost of land, but also the cost of materials. Government bureaucracy is also making it more difficult and more expensive to build a home.
Perhaps the most expensive aspect of home building today is the cost of labour. We are experiencing very low unemployment rates right now, and there’s a lack of qualified labourers because not a lot of people are going into the construction field. Builders are having to pay through the roof for it, no pun intended.
The Worst of Times for Traditional Investors
Right now, traditional investors are getting squeezed from every direction because of:
- Competition with iBuyers
- Fewer foreclosures than in the last 20 years
- Less inventory
With less inventory, traditional investors are fighting for whatever scraps are left. They are also competing with large institutional buyers who are coming in and buying huge blocks of houses. Being a traditional investor is very challenging right now because there are more traditional investors than there are deals.
The Best of Times for Creative Real Estate Investors
My apprentices and I are capitalizing on the affordable housing crisis in America and we are crushing it right now..
House Flipping in the Current Market
A recent study on the current home buyers market in America found that over 50% of home buyers are looking for a house under $200,000. At the same time, the median list price of a home in the country is $300,000. This shows that a majority of people are looking for houses $100,000 less than the median price point. We’re marketing to sellers in that affordable price point and because we’re getting off market deals, we don’t have the same challenges that traditional investors have.
In and Out Flip Model:
We’re pursuing off market properties and getting those deals locked up. Often we’re doing creative techniques that give the homeowner even more money. More importantly, we’re able to do it without dealing with hard money lenders and their additional costs. We are also avoiding the risk of paying all cash. Sometimes we fix them up and sometimes we don’t, and then we turn around and resell these properties. Almost every time we have a multiple offer situation because we’re in that affordable price point.
Once you get up into that higher price point where there is a glut of inventory, that’s where people are struggling. God forbid you attempt a deal on a large home in the Southeast right now. There are areas with entire neighbourhoods up for sale because the baby boomers are moving out. They all want to downsize and are trying to sell their six bedroom, but no one is buying.
Applying proper techniques at the proper times is key. We’re making a fortune, but we know where to focus. Affordable housing is where all the money is being made right now.
Rental Property in the Current Market
What about rental income and real estate investing long term? I have a video on how you can purchase rental property at the top of the market and still win big. In it I share how with rental investing your time horizon should be forever. If your time horizon is forever, then you focus on increased cash flow, not whether or not your property appreciates. I’m not concerned whether my rental properties go down or up in value. My focus is how much cash flow they’re producing. I have properties that are producing over 50% cash on cash return, so I’m not concerned about what the market is doing.
Focus on Cash Flow
If you are investing in rental property, cash flow needs to be your focus. I highly recommend short-term vacation rentals because of the significant cash flow. I believe that focusing on short-term rentals in recession proof areas of the United States will give you longevity as well as cash flow like a freight train.
This business model will only get stronger as Airbnb, HomeAway, and TripAdvisor take more of the market share away from the hotels. The more people stay in homes and have positive experiences, the more they tell their friends. Before you know it, people are staying in single family homes at an Airbnb, HomeAway or TripAdvisor vacation rental instead of hotels.
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!