Today I’m talking about how to figure out when it’s a good time to pull your money out of the real estate market.
OK, guys, you heard it here first. The Real Estate Dingo is telling you that you need to pull your money out. This is why.
Should You Pull Your Money Out of the Market?
A little over a month ago, if you looked at the real estate markets across the country, they had surpassed the peaks of 2005 and 2006. A month or so ago, if you looked at the stock market and Dow Jones Industrial Average and a lot of other indexes across the world, they were at all-time highs.
After being in real estate and an entrepreneur running various companies for the last 10 years, I haven’t really lived through a market cycle or recession—but it seems that’s about to change. I was still pretty young and inexperienced in 2008 and 2009. But I am smart enough to have smarter people around me who are “old-timers” when it comes to investing.
A lot of these individuals told me that every 10 years or so is when we have a dip or when a recession hits. Real estate prices tend to go down, the stock market also tends to go down, and everyone’s in fear and panic. Then, the market plunges even further.
In this instance, the coronavirus/COVID-19 pandemic is exacerbating that fear and panic.
Look, we’ve really had a pretty good run. If you look at the last 10 years, a lot of investors who I talk to on a daily basis are telling me that they’ve made a lot of money in the stock market. A lot them are pulling money out of their home equity line of credit because they’ve made a large capital appreciation or equity gain in their personal residence or other investment properties.
So, this has started to become a pretty common topic that I’m hearing. A lot of folks have done really well and made a lot of money.
In my opinion, what you should do when you’re on top of the hill is take some money off the table. Sell a few properties and sell out of your stocks.
I’m a big believer in cash. I love cash. Cash is king, and cash flow is queen.
In the current market conditions and circumstances, I don’t think there is anything wrong with liquidating out of investment properties in markets that have already appreciated.
So pay your capital gains taxes, pay your taxes, and park your money in a very conservative money market account and just sit on it. You know why, guys? Because when the market plunges further and you have the cash to jump in, you’re going to make so much more money.
There are going to be people who are fearful, who are desperate, and who want to sell out, making it easier for you to get better deals and negotiate harder. Just remember cash is king.
I think that taking that route is better than maybe waiting for another year or two to try to make more money. If you are happy with where you are right now and how much you have profited or gained, take the money off the table and sit on cash. There’s always going to be a deal around the corner.
Here in the Midwest, we feel like kids in a candy store. I’m not the only one who’s going to tell you this. There are a lot of other operators like myself who will say they’re doing well in the Midwest because of the deals and opportunities. The cash flow makes sense, and the profit margins are good.
So keep that in mind. There are markets out there that still haven’t recovered, there’s still a lot of foreclosures, there’s still a lot of opportunities. And maybe consider using your capital to get in some of these markets here in the Midwest.
Once again, I don’t think you could go wrong selling out right now. I said it first: keep the cash and wait. Then, go all-in once you have seen the market has gone as far down as it can go.
So that’s it! Take it for what it is.
Do you believe we’re headed toward a recession? If so, what are you doing to prepare?
I’d love to hear from you in a comment below.