In this episode, I discuss why I believe there is never a bad time to invest in real estate. There are a lot of things said in the news and in the general media about real estate from one year to the next. I started investing in real estate at perhaps the worst time in history (according to the media), and it was the best thing I ever did!
I started investing in real estate in 2008. If you remember anything about real estate and the economy in general, you will remember that 2008 was about the time when real estate values dropped dramatically. In 2008/2009, real estate values were at a 30 year low. All the news talked about was how bad real estate was, how much money everyone was losing, and how it was the worst time in history to be a real estate professional. There was some truth to this–if you bought a house for top dollar in 2006, by 2009 you probably were in a severe negative equity situation. However, if the house you bought was intended to be your family home and you planned on living there for the next 20 or 30 years, there really was little impact to you. If you bought cash flow properties that were cash flowing to your satisfaction and then house values dropped, you probably were still okay since your cash flow was still just as good. If you were a flipper and you bought a house in 2007, and it took a while to rehab and you weren’t able to sell it until 2008 you probably were very negatively impacted. However, since that should only take 4 to 6 months, the amount of damage you could sustain from the dropping prices should have been minimal.
So having said all of this, why am I telling you that there’s never a bad time to invest in real estate? Because real estate is an industry that always has great potential for you to make money if you understand the trends, and more importantly are willing to adapt to changing conditions. I have never really gotten into doing short sales, but I know from talking to friends and colleagues in the industry that 2008 through 2010 was an excellent time to be doing short sales. Somewhere over the last few years the short sale industry has slowed down considerably. I’m not sure exactly when, because I’m not a short sales kind of guy, but I know that the trend changed. If you continue to try to run your business exclusively doing shorts sales, you probably are having a harder time now that you were three or four years ago.
To put it in very simple terms, if real estate values are high, then you will make more when you sell a house than you would if values were low. Simple right? So you can afford to buy at a slightly higher price point because you know that you’ll be able to sell for top dollar. Consequently, when house values are low, you are able to also buy at a much lower price point. So regardless of where the market is, there’s always an opportunity to make money if you understand the current market conditions and adjust your business model accordingly.
I can tell you this with 100% certainty: no matter what the market conditions are in real estate, somebody is making money. That somebody can and will be you if you pay attention and adjust as needed.