I have an opinion on everything and real estate is one I tend to air more frequent then most but its both because I am passionate about it and I am in it everyday. So figuring out a way to tell a story daily or sharing information that might be beneficial to a reader is important to me, as is finding good information from others with an opinion on topics I know little about. As for this post, it’s about why people make up bad excuses to not buy real estate in good times. I absolutely understand both sides of it and love the idea of waiting for bad times to buy, but that is not always the best way to make a purchase in real estate and many times its not even worth the headache in the end. So here goes
Not paying retail prices– I hate paying full price for something I do not see value in and overpaying seems absurd but it’s also a great way to create value form the sellers in a transaction. When paying full price for a property, you can hold contingencies that are not available when you are paying below market. A property should be in tiptop shape, pass inspections and be ready to go on day 1. Asking for extra time to close is also more welcome when someone feels like they are getting top dollar for their property. Yes on the front end you are paying more then you want, but you are also buying a property that has greater value at closing
Loans are too expensive– You ever try to get a loan in bad times or for a distressed property? Todays appraisals are awesome and the interest rates, even though creeping up are low. When times are good banks have more money and a willingness to lend, which can turn into better terms in the long run. Yes you have less of an upside probably on the real estate but your benefits come from better payment options and purchasing programs.
Rents are too high– Yes! That’s great for anyone that owns property. There is obviously nothing better then buying a property low, doing minimal upgrades and leasing for a high amount. But there is also nothing better then buying a property and on day 1 without additional investment leasing at high rates. You can lock in tenants for nice long term leases based on their strong outlook down the road. Carrying a property can be costly and you can get passed by real quick with changing trends but buying something that is in demand today can be a huge windfall.
I am waiting for the next correction– When is that exactly? I get it and totally agree that buying in bad times with cash is insanely profitable but you can not predict that time and sitting stagnate until that time comes can be costly. The cost of missing an opportunity can be frustrating and the worst of the worst is having no tenants for your newly acquired “deal” in a bad market. Landlords get desperate in bad times and while they are glad to have a renter at all many times they make long term commitments that hurt their long term return.
While I am a fan of buying low and selling high in general there are many ways to look at investing in real estate depending on your particular situation. Sitting on the sidelines and avoiding risk is one thing but looking for opportunities in all markets is key to a smart real estate investor. I am always glad to discuss.
Curt owns WKRP Indy Real Estate and has been in the Indianapolis Real Estate business for over 10 years and spent his first years learning all aspects of commercial management and brokerage. He has had great success in managing existing commercial projects and new retail and office developments. Curt specializes in building owner representation and purchases in the Westfield Indiana market as well throughout the Indianapolis Metro area. Curt is passionate about growing the local Westfield community and in his free time volunteers with Westfield Youth Assistance and raising 2 children with his wife Jennifer.