A lot of people think about getting into real estate investing, buying an investment property, and becoming a real estate investor. But not many people act on this thought.
Even worse, people are waiting for “the right time” even though they have the investment property financing or other means to invest in real estate.
So, why wait? If you’re thinking about buying an investment property, now is the right time. This is not just to say that you should plunge into real estate investing just because. No, it really is the best time to buy a house for real estate investing. Let’s take a look at why.
Buying in a Seller’s Market?
It’s a seller’s market in the US housing market 2018. This is true for most major real estate markets where buying an investment property will bring you a good return on investment. So, why not wait until a buyer’s market comes around?
First and foremost, the hot real estate markets stay hot and stay seller’s markets all year round, every year. Still, real estate investors selling and buying an investment property can get a great return on investment either way. So, don’t worry too much about labels like “seller’s market” or “buyer’s market.” Successful real estate investors aren’t discouraged by such labels, and you shouldn’t be either. The time for selling and buying an investment property essentially never lets up for good reasons. It’s always the best time to buy a house for real estate investing in real estate markets like San Francisco, San Jose, New York City, Los Angeles, Seattle, Portland, and Chicago.
Related: Is the 2018 US Housing Market a Seller’s Market or a Buyer’s Market?
How Much Will Real Estate Property Prices Climb?
One of the major characteristics of a seller’s market is the climb in real estate property prices. This is one of those things that discourage real estate investors from buying an investment property. But if, as mentioned, you can manage the investment property financing and take out a loan, it will be well worth it.
The reason you’re not hearing real estate experts say to wait before buying an investment property is that real estate property prices will continue to climb throughout the year. According to Zillow, home prices rose by 8% last year, and the forecast for this year is 4.2%, with the median home price at $213,146. While that may not seem like a huge jump, with the combination of it being a seller’s market and the ever-rising interest rates (as we will see), it can all make it more expensive as time goes by.
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Real Estate Appreciation
Why is all of this information supposed to encourage you to be buying an investment property now? One of the major benefits of real estate investing is real estate appreciation. The thing about real estate appreciation is that it has never been so tangible as it is in the real estate market 2018. While I’m not saying you’ll make millions in return on investment if you buy now and hold, you can still make a great return on investment. This is especially true if you are buying an investment property for which you can force appreciation while enjoying the natural real estate appreciation that comes with it.
Interest Rates for Investment Property Financing Are on the Rise
Most real estate investors take out a mortgage loan when buying an investment property. So, it’s likely interest rates will affect your ability to get into real estate investing. While interest rates are already high, they’re only going to climb throughout the year. In March 2018, interest rates were raised by 25 basic points (from 1.50% to 1.75%). There are plans to raise interest rates at least two – if not three – more times before the end of the year.
Inflation
The reason interest rates are on the rise? To curb inflation. This means inflation is well and happening. Luckily, another major benefit of real estate investing is that it is a “hedge against inflation.” As inflation occurs, the cost of living goes up. All the while, buying an investment property becomes more expensive (real estate appreciation), and rental income will increase as well. All good things for someone who owns an investment property. If you wait, however, you’ll find it more expensive to be buying an investment property. So, don’t.
Related: What Are the Benefits of Investing in Real Estate?
Wait, Won’t Investment Property Prices Fall as a Result?
It’s true. There are forecasts that say a buyer’s market may be around the corner, maybe in 2019. With interest rates going up to curb inflation, seller’s hands are forced to lower investment property prices. But here’s the thing. Those with the best real estate investments will simply hold onto their investment properties until prices are up again. These savvy real estate investors know they’ll benefit more from the rental income than the return on investment from selling if prices were to significantly fall.
Consequently, you’ll be dealing with lemons, or you’ll be dealing with really motivated sellers for the most part, and great real estate investments will be far and few in between if this happens. Otherwise, prices will fall slightly, not making too much of a difference for those buying an investment property.
Waiting for Wintertime in the Real Estate Market
The winter months of the year are known as a good time for buying an investment property at a discount. So, it’s common real estate investment advice that the best time of year to buy a house for investing is winter. This is good real estate investment advice, no doubt. But there is a fatal flaw in this investment plan.
Two Types of Motivated Sellers in the Winter
The reason you get such a bargain when buying an investment property during this time in the real estate market is simple: motivated sellers are the ones selling an investment property. This is a good thing if and only if they are motivated sellers for reasons unrelated to the investment property itself. This means that these motivated sellers of real estate are forced to place an investment property for sale during this time in the real estate market – the time when they know they won’t get the best price – for personal reasons.
There is another motivated seller, and if you are not careful during the winter in the real estate market, you are more than likely to run into them. This motivated seller is someone who probably put the investment property for sale during the “hot” months of the real estate market. However, he/she could not find a buyer. With all of the competition going on during those months, you have to ask yourself why? What is wrong with the investment property? It’s likely you’ll find plenty of reasons.
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While these are two ends of the spectrum of sellers you’ll find during those months of the real estate market, it’s still a large possibility that you’ll run into the latter. That’s why so many real estate investors go ahead with buying an investment property during the hot months. It’s because they know that even though they may pay more, they’re getting the best real estate investments.
Buy Low and Sell High
Many real estate investors go by the mantra “buy low and sell high”, and that’s what keeps them from buying real estate property right now. The truth is that you can always find motivated sellers selling a perfectly good investment property for below market value. With the trends in the real estate market and the rise in prices, you’ll essentially make a killing in return on investment in little or no time at all if you are able to find these motivated sellers and flip the investment property. You don’t have to wait until the winter if this is your investment strategy.
So, Jump in… With the Right Real Estate Investment Tools!
The only way to ensure you are jumping into a great real estate investment that will allow you to benefit in all of the ways we’ve mentioned is by using the right tools. Mashvisor has those real estate investment tools.
From our property finder, which shows you the top performing investment properties in any real estate market, through our heatmap, which allows you to find exactly what you’re looking for from price to cash on cash return, to our investment property calculator, which lets you see the kind of return on investment you’ll get with a specific investment property and your financing, you can’t go wrong with Mashvisor in today’s real estate market. Take full advantage of the best time to buy a house for real estate investing.
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Buying an investment property now is a good idea. If you have been hesitant in the past, you’ve already missed out on great real estate investing opportunities. Don’t miss out on any more.
Just be sure you are ready for real estate investing. Be sure by reading: How Do You Know You Are Ready for Buying Rental Property? As long as you are ready mentally and financially to become a real estate investor, now is the best time to be buying an investment property.