» Is this the Right Time to Invest in Real Estate? » Posted by Realestator      

The Real Estate Market has done a downturn. Prices are crashing down around your ankles. So is this the right time to Invest in Real Estate?

Actually, it’s a golden opportunity to increase your property portfolio. When you are buying property it doesn’t really matter whether the market is up or down unless you are considering selling in the short term. If you are holding long term then you have the luxury of waiting for the inevitable appreciation over the years.

If you can buy at the lower end of the cycle that is the best time to buy, but very often it is hard to tell precisely where the market is at.

The only way you will know if a market has hit bottom is when it begins climbing back up. So don’t try to time it too much.

If the market is experiencing a severe downturn, it is a great time to invest in real estate because there will be a large number of bargains. Just check the foreclosure lists and mortgagee auctions. You can pick and choose and buy at rock bottom prices.

A word of caution - do not settle for negative cash flow, because this is how most investors get themselves into trouble in the first place. Go for positive cash flow. In other words, make sure your rental income equals or exceeds your outgoing expenses, including mortgage repayments. There is nothing so good as sleeping easy at night knowing that your property has positive cash flow.

Negative cash flow is ok if you have a really good income and a tax problem.

If the property market is rising rapidly you can be confident that the value of your investment is increasing. That is where your profit is and you should be able to sell relatively easily if necessary. However, that was when the market was buoyant, but now the reality is that the market has dropped and you need to be able to hold long term without any worries. It may take a few years before we hit healthy real estate selling conditions again, let alone a property boom.

Meanwhile , concentrate on positive cash flow and steadily increasing returns. This is a long term game and always has been. Look at property investing from a business perspective and do the math before you buy.

Having said all that, there is no getting away from the fact that with good research and due diligence, the down and depressed real estate market presents serious investors with the best opportunities to build a portfolio of profitable properties for long term gains.

For more real estate investing information, visit the realestator’s website at www.real-estate-investing-support.com

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» Posted in Real Estate Analysis on May 14, 2008.

Comments

One Response to “Is this the Right Time to Invest in Real Estate?”

  1. Chris on May 15th, 2008 @ 5:21 pm

    That’s some awesome advice. I’m a Canadian investor, and I’ve been wondering how many smart US investors there are who are just sitting back and laughing….and buying more property!

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