Millions of people have used real estate investing as a way to accumulate wealth over the past several decades. With money in the right properties, you can generate a monthly profit as you collect rent from tenants; even more importantly, you stand to generate a return on your investment by capitalizing on property appreciation over time.
But if you’ve never invested in properties before, you might be intimidated at the thought of getting involved in such uncertain times. Is now the best time to get involved in real estate investing? Or should you hold off for a few more years?
How to Start Property Investing
Let’s start with a briefer on the nature of property investing. It’s hard to concretely define property investing, or make timing recommendations for every person because there are many different available strategies. For example, you could focus on residential properties, attracting tenants to lucrative rentals in popular neighborhoods. Or you could focus on commercial real estate, capitalizing on businesses that want to move into the area. You could even purchase real estate investment trusts (REITs), which function much like stocks or ETFs, and expose you to many real estate investments simultaneously.
In any case, if you’re just starting out, your lack of experience could work against you. You won’t know how to determine what makes a property “right” for investing, your sense of timing will be off, and you might not know how to sniff out the best deals.
Fortunately, there are several ways you can mitigate this. For starters, you could study to obtain your real estate license. This is a process that takes time, but it’s perfectly achievable for anyone, regardless of your past experience with real estate (or lack thereof). Once you have the license in hand, you’ll have access to far more deals, and a better knowledge of the market. Otherwise, you could consider working with a mentor, looking for guidance from someone more experienced, or you could partner up with someone else interested in real estate.
So why would you want to get involved in real estate investing now?
There are several possible motivations. First, interest rates are nearing all-time lows. It’s possible to get a home loan for a primary residence as low as 2.5 percent, with loans for investment properties at similarly low levels. If you’re interested in buying property with the lowest possible interest rate and a sizable loan, this could be a valuable opportunity.
You might also be interested in capitalizing on the uncertainty generated by the COVID-19 pandemic and recent stock market fluctuations. In some areas, property prices are volatile, seeing a surge in buyers as well as a surge in sellers; you might be able to find an incredibly good deal on a property, setting yourself up for a powerful first investment. Companies such as Brookfield Property Partners has proven to be good investment options, with BPY stock quickly recovering after the cov-19 pandemic.
The Problem With Timing
Of course, there are several problems with attempting to time the market.
First, timing the market is nearly impossible, even for seasoned real estate investors. The reality is, economics are a complex and chaotic field, driven by millions of factors—not all of which are predictable. In retrospect, it’s easy to spot a bubble or identify a trend, but in the present moment, it’s nearly impossible to predict the future. We could be heading toward a strong market for years to come, or we could be on the verge of a mini-collapse. No one can say for sure.
Second, most factors that lead to favorable buying conditions can also complicate the market in secondary ways. For example, lower interest rates mean you can score a better deal on a home loan. However, because these rates are available to everyone, they can also lead to a surge in buyers, and therefore higher prices and more competitive bidding.
Finally, and perhaps most importantly, it’s possible to find good deals on real estate no matter what your timing is. During a housing market collapse, you’ll see rock-bottom prices on great properties that are poised to recover. In a market with high prices, you’ll be able to score great terms on a loan, and if you look around, you might find a property for a relatively low price.
Should You Get Started In Real Estate Investing?
Let’s turn our attention back to the bottom line question: is now a good time to start investing in real estate?
There are many favorable conditions for real estate investors right now, but those may change in the near future—or they may grow even more powerful. If you’re genuinely interested in real estate investing, it’s best to get started as soon as possible. This way, you’ll have more time to gain experience, capitalize on appreciation, and patiently wait for the best possible deals.