News flash: Real estate is in a downturn. Prices are dropping. Does this mean that you should get out of Real Estate investing? No this is actually the BEST TIME to increase your property portfolio. When you are buy property it does not really matter whether the market is up or down unless you are trying to do a fast turn over. If you are holding for the long term then you have to deal with the market fluctuations with an inevitable upward trend at some point. If you can buy at the lower end of the cycle that is the best time to buy of course.
When the real estate market is experiencing a downturn it is the best time to buy. Just check the foreclosure lists and auctions. You can pick and choose and buy normally below market value. However, keep an eye on your monthly bottom line. In other words make sure your rental income (from your new investment) equals or exceeds your outgoing including mortgage repayments. If you have other income you may be able to stand an extra $100 or more per month to top up the mortgage but try to avoid it. You will sleep far better at night knowing that the mortgage payments are taken care of.
OK we all know that in a strong market, when the prices are going up, our property value also climbs. However now, in a slower and declining market you need to change your focus to hold for a longer period. We are looking at a few years before a more friendly market for investors shows up on the horizon.
Several investors that started during the “boom” now have to change how they are thinking about investing. This is the time when we separate “those who can from those who got lucky and made a few bucks”. Now is when the long term hold plans must start becoming the focus. This is a business. You need to do the math. Will your income from your investment cover the expenses/new mortgage?
Taking the current market woes in to consideration, the fact that now is a great time to buy and hold for the long term, goes without saying. Due diligence is the key for the next few years. Now is the time to look at buying for long term gains.
Real Estate Investing For the Long Haul
No comments:
Post a Comment