How I Know When It’s Time To Get Out of Real Estate
With the shift in the real estate tide coming in, hordes are flocking to invest, buy, and venture into the world of speculation.
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However, for anyone that’s been in real estate the last 5 years, there’s certainly been times where I’m sure the thought has crept in…”should I get out of this business, at least for awhile?” The difficulty in financing, the fallout of pricing, and general malaise towards the industry deterred most from considering real estate as a profession.
Now with prices rising once again, there still is a undertow of confusion towards purchasing. Are prices going far too high? Are profit margins all but gone? Will all the competition make my marketing efforts meaningless?
But, this blog post actually isn’t going to focus just on the economics of when to get out of real estate; rather, when’s a good time for YOU to get out of the business.
#1) The Thrill is Gone
When the excitement has left, apathy sets in, and bad decisions get made. Or, not much gets done at all. Which will feed into the self-fulfilling prophecy that real estate isn’t profitable and is a waste of time.
Given, anyone that’s spend a lot of time in a high-stress high-stakes career tends to wane in their enthusiasm from time to time. After all, no pain no gain right?
But, at some point you’ve hopefully reached your financial goals, can retire a multimillionaire, and either hire out staff to take over the tasks that drive you insane, or retire altogether.
But, if you are starting to disdain what you do, have given it a go, and it’s simply not for you anymore, it’s a good time to bow out.
#2) The Bottom is Dropping Out
During the downturn, much of the concern from the investors standpoint (both those who were holding property and buying property) was, when’s the fallout going to end? Timing markets is a mix of science, behavioral economics, and art. But, if clairvoyance isn’t your specialty, sitting on the sidelines may be a more sound approach then being on the playing field and trying to play rugby blind.
Again, much of this is prefaced on where you are at financially. I’m hearing just as many investors saying “Prices are too crazy, I’m selling everything” now as I did in 2008. But, I can’t judge, because it all depends on when they bought, how they bought, how much they paid, their goals, cash flow, and predictions.
But, during a time of much volatility, it’s crucial to determine your exit strategies if you’re still going to play the game. If you’re still new and don’t feel comfortable navigating the rapids alone (don’t you just love these vivid analogies!), then it’s probably better to let the dust settle and tip toe back in.
When is it GOOD to get into Real Estate?
Now the evangelical in me comes out to profess, “Honey, it’s AL-ways a good time to get into real estate!”. This could be, however, working in a position that correlates with the industry, perhaps not directly in sales or acquisitions though.
If you understand where the market is and how to profit, buying and selling or buying to hold may come as second nature. It may not be in your own backyard, and heck, it may be while others are begrudging the entire asset class. But, depending on your foresight, financial ability, and risk tolerance, people will always need a place to live, and there will always be a way to capitalize from filling a demand.
I’m a big proponent of working IN the industry before you go it alone as a real estate investor. After all, why not get paid to learn? This also gives you the opportunity to see if you truly enjoy this business, find your niche and make connections.
But, coming from someone who survived the storm in one of the hardest hit areas of the nation during the foreclosure crisis (who came out alive and ahead), I can fully attest to two things:
- Don’t always listen to the hype. Dig deep to get the facts, link up with winners, and let the naysayers talk while you forage forward.
- Be smart. Know when to say “when”, make strategic moves, and be open to change.
What do you think?
When’s do you think it’s time to get out of real estate? What about the best time to get in?
If you like this topic, let’s keep the conversation going…..please share this on Twitter, G+, and Facebook. Thanks a million!
Photo: Almond Dhukka