When To Invest In Real Estate and When Not To

As with all things in life, investment-wise or other, there are some times that are better than others for getting started. In real estate, this often boils down …

Real Estate Jenga

As with all things in life, investment-wise or other, there are some times that are better than others for getting started. In real estate, this often boils down to analyzing the market to determine whether interest rates and economic forecasts are favorable or not.

For the investor, there is also a need to scrutinize personal finances to decide if now is the right time to move assets or add a new investment to an existing portfolio. In this post, learn expert tips about when to invest in real estate via MLS and when not to.

Signs It Is Time to Wait

Right now nationwide, it is considered a very good time to invest in real estate overall. This is because interest rates on mortgage loans are low, unemployment rates are dropping and overall, the economy is starting to rebound.

But just because the market overall is favorable doesn’t mean it is the right time to invest in real estate for you personally or in your local area. Here are some key signs it is best to wait:

Your portfolio is already heavy on real estate.

As an investor, overall your goal is to build a risk-diversified portfolio. This should include different asset classes, some more stable and some riskier, to give you the best long-term return. If you want to invest but already have a lot of real estate in your portfolio, you might best consider a different type of investment instead.

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You have no desire to become a landlord or property manager.

If this is the case, it doesn’t necessarily preclude you from investing in real estate. But you may want to consider buying into a real estate investment group (sort of like a mutual fund for real estate holdings) instead.

You know nothing about investing in real estate.

You may be an expert in stocks, bonds, mutual funds, commodities, et al, but if you haven’t studied up on buying real estate for investment purposes, this is where you should start rather than jumping right into buying an investment property.

Signs It Is Time to Invest

Of course, given the current strong and favorable market conditions, if you do have all your ducks in a row, plenty of cash flow and a taste for real estate as a business investment, now is a great time to start investing.

You are debt-free and have your emergency fund in place.

Real estate investing definitely has a place in a diversified investment portfolio. But what surprises most eager investors is where that place is – after debt is paid off and you have accumulated several months’ of expenses in ready cash that you could use in an emergency. If this is where you find yourself now, then now is a great time jump in and get started investing in real estate!

You have found a genuine great deal.

If you’ve been looking at properties of any length of time, you are probably starting to figure out what separates the so-so from the good and then the great properties. Some properties are just rare finds, even if it is for sale by the owner, and if you have one of those within your sights and all of your other stars are in place, then make the deal with confidence.

You are planning to buy and hold the property.

Real estate generally isn’t the type of investment where you can expect to “get rich quick” or even make a quick buck (although sometimes this can occur in home flipping). More commonly, you will make your money by buying a property and holding it until it significantly appreciates. If you have the wherewithal to hold a new property for some time, then now is definitely the right time to invest.

With these guiding principles in hand, you will be able to decide when the time is right to add real estate to your investment portfolio.

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