Investing In Real Estate In These Times

I’ll say it yet again as this is becoming my main message to the world about real estate: The only bad time to buy real estate is when you can’t afford it. In terms of markets etc. there are only good times and better times. This is simply because real estate values go up in long term and fluctuate in short term. Sure you can complicate things with lots of stats and etc. but it all boils down to this. Of course, if we’re talking about investing as a profession where we build major projects like condo developments, whole neighbourhoods or substantially altering the use of a location, it does get more complicated. But that’s a deeper discussion for the pros and this blog is more for for homeowners and potential investors who would like to supplement their income with real estate. For such people it’s mainly about whether you can afford it, if the credit is available and how you feel about being a landlord.

Ironically, the way most people perceive real estate markets, thanks to our mainstream media, is backwards. The very best times are almost by definition the times when no one is buying because most people are thinking it’s a bad time to buy. (When do you get a better price on skis? In the early winter or the spring?) I bring this up because the article below mentions how a few months ago no one was buying. Well if  by “a few months ago” they mean February or March, then that was the absolute best time to buy a property that you intend to hold onto for a bit. Prices were still on their way down, interest rates were at record lows and no one knew for sure if we were at the bottom yet so sellers were often willing to take quite low prices because for a while there only about one in six places were selling. Only a few months later now, and it’s different story.

Not that things are  now either. Interest rates are still super low (albeit not quite as low as before) and will be until at least part way through next year, prices are still lower than they were at the peak of the boom (only by a bit now) and although there will always be the alarmists and naysayers out there, most believe that 2010 is going to be one helluva year. I know this fall sure has been and Realtors are usually in stand down mode by now as Christmas approaches, but many of us are still working hard myself included.

You may be asking yourself “If Ryan is telling us that whether or not we can afford to make the payments is the most important thing, then why is he talking so much about what markets are doing?” Well, it’s because although the easiest safest way to invest is to buy a place to hold onto and rent it out while the property’s value increase while the rent does too. That’s the bit that anyone can make use of and understand. This is in fact what I am intending to do over the years myself. However there are ways to make some cash off markets for people who are handy for example. People who have professional experience with renos/building can do really well over a short period of time by flipping properties. But that’s not for most people. Desp[ite my knowledge of things real estate, and my ability to recognize a properly done reno or construction job, I don’t think I should be doingthis because I would probably cost myself money rather than make it. I say this because I’ve seen far too many people who presumably watch a lot of HGTV try it, fail miserably and cost themselves lots of money. That’s always sad to see.

For more info on my thinking on this subject, see my six part series on “When To Buy And Sell”

I just want to add that if a landlord allows a tenant to live in the rental property for three months even though they haven’t paid the rent, that was the landlord’s doing as much as the tenant’s. In B.C. the landlord can kick them out in 10 days if they haven’t paid.

Ryan Coffey

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