HMW #106: Should I wait for interest rates to drop?

Is now a good time to buy real estate? 

We all want to know the answer to this. Depending on when you are reading this home prices might be higher than usual, same with interest rates, or there could be a housing shortage or a housing surplus. Add in wars, Presidential elections, and it would be easy to panic. 

So how do you navigate all these variables to determine when to buy your next investment property? 

I'm going to teach you the most opportune times to buy real estate investments and believe it or not, it could be right this very minute.

No cap.  Buying real estate right now (regardless of when you are reading this) is most likely the best time to buy an investment property.

Unfortunately, many people don't agree with this statement and they will be financially left behind.

Their main worry is:

The real estate market is going to crash soon.

They choose to sit on the sidelines because:

• Prices are too high
• Interest rates are too high
• Their down payment is not big enough
• Not liking any of the properties available

I know you probably have, but you should actually consider ignoring those things.

What?!??!  Don't pay attention to prices, rates, and down payment?  That is correct, kinda.

I'm here to give you hope that these are factors worth considering, but not deal breakers.  Let's learn how to overcome these worries and concerns about real estate once and for all.

Reason 1: Your crystal ball is broken

You have to think like a long-term investor. All long-term investors know there are ups and downs in the market and they also know they can't time it.

Every week I can find equal amount of articles online saying the market will go up and the market will go down soon. And half are right. And the other half will be right in the future. They just take turns being right.

But here's the tricky thing. You aren't an expert. And experts have a 50% success rate.

So where does that leave you? Easy! Don't worry about it. Every property will go up and down in value. And you know that, so don't let the noise keep you from buying.

Give as much credence to those sensational headlines as you do to that psychic that told you that you will have your dream life in 7 years.

Yes, you can indeed have that dream life in 7 years that was foretold if you actually get around to buying real estate, rather than making excuses about market conditions.

Reason 2: You take advantage of better conditions later on

I've found great deals that make sense with 20% interest rates. I've found terrible deals that I've passed that wouldn't work with 0% interest rates.

A rate is just variable, not the sole characteristic of what makes a a good deal.

Let's say you get get a 30 year fixed rate mortgage for 8% on a new investment property.

And you hate that rate. It's painful. It drives you nuts.

But the property cash flows at that rate so you buy it anyway.

Your future now includes either:

A) interest rates down

B) interest rates the same

C) interest rates up

If it's A, then you refinance. You lower your rate and you get more cash flow.

If it's B, then you do nothing, but at least you bought something that was cash flowing when you did.

If it's C, then you celebrate. You are a genius who lucked into timing the market without even meaning to.

Timing is impossible to do. I have clients who for 7 straight years said:

• "Prices are too high for me to buy, I'm going to wait for prices to come down."

And then when prices came down, guess what they said?

• "Interest rates are too high for me to buy, I'm going to wait for rates to come down."

Don't be this person. They could have had 7 years of real estate growth, principal payday, and cash flow!

If you buy a property with high interest rates that cash flows, you are good forever.

Are you a wannabe investor waiting around for perfect conditions or are you going to be a long-term investor willing to take action today?

You should, no doubt. But I'm trying to make that fortune teller you used look legit. I need some action on your part. 

Maybe one more reason will get you moving:

Reason 3: Your savings can't outpace the housing market 

Use the down payment you have today to buy something today. 

It may not be perfect. It may not be your dream property. But if it cash flows, you need to buy.

Saving an extra $10,000 to buy a better property in a better area later doesn't work.

Why?

Because that property will be worth $20k more by the time you get that extra $10k. 

Yes you'll have more money, but still can't afford it. You can still buy the same property you passed up a year ago that also went up in value.

Now, sure house prices may drop, but what causes that? It's interest rates going up.

So if rates go up and prices go down, you are still buying the same property when rates go down and housing prices go up.

The property you can buy today is the the property you should buy. Let time be an asset to your wealth building. Because we all know it's time in the market that makes you rich, not timing the market.

So with these 3 reasons spelled out, are you now seeing that it's always a good time to buy cash flowing real estate?

Great!! I think. Or is that sarcasm?

Let me pose it this way: If I had a crystal ball and tarot cards and said the exact same thing, would you act on it and take action to improve your life in 7 years?

Hooray! 

Summary

• Cash flowing today is all that matters
• You can refi to better rates later if you want
• Experts are wrong half the time, so pay them no mind
• Saving for a large down payment doesn't buy a better house