Seeing the Real Estate Market Bottom in the Rear View Mirror
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Every week I talk to new people interested in investment real estate. Most of them can see the incredible opportunities in the market these days between all the foreclosures, short sales, and generally the lower prices of investment properties. Add to
that one of the strongest rental markets that we have seen in years and good interest rates and you could call this the perfect storm of real estate investing.
Despite all these indicators, I do run into an occasional fence-sitter. This person who is sure that the market is going to go down a little more and the deals are going to get that much better. They are going to wait until the absolute bottom of the market. In their minds, they are able to do what none of the experts even claim to be able to do. They think they can predict when the bottom of the market is.
I am hear to tell you that will only see the bottom of the market in the rear view mirror. Here are two reasons that you do not want to wait to start building your investment property portfolio:
- What indicators are you using to predict the bottom of the market? Prices, housing inventory levels, average time on market, or maybe just how long your neighbors house took to sell? All of the above stats are lagging indicators. In other words, they show was has happened in the past. And what if they show that for that one time period that the market is upturning? You have already missed the “bottom of the market”. Plus more simply, if real estate investing is considered a long term wealth building prospect, who cares if you missed the last .5% of value decreases before you buy?
- Waiting to buy may actually cost you money as interest rates and mortgage regulations may make your cost of money more expensive. We have seen massive changes in the lending requirements for investment properties. We are expecting to see even more. Where once you could buy a 4-plex investment property in Minneapolis for only 5% down, now you need 25% down. In fact, the lending requirements have actually sidelined many seasoned investors because of the elimination of stated loans.
Get started now. Stop waiting for that perfect property or the best deals or the bottom of the market. Now is the time.
Scott Ficek is a Minnesota Real Estate Agent with RE/MAX Advantage Plus in Minneapolis and helps new and seasoned investors buy and own Minnesota Investment Property. Find his website full of useful information at Minnesota Investment Real Estate or use it to search the Minnesota MLS for Investment Properties.
Yes, Scott. My favorite rehabber client and I have tried to buy a couple of properties recently and I see that your client(s) have scooped them up! Good for you! I love competition. It’s great for our economy. Yay, capitalism!
It is funny, but people are amazed when I tell them that we are in multiple offer situations and will pay above list price for many properties these days.
We have an active search running in certain areas and will get out day 1 that a property comes on the market. We are trying to make offers within the first week, just to beat the competition.
Keep trying!