{"id":162645,"date":"2023-11-22T09:22:02","date_gmt":"2023-11-22T16:22:02","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=162645"},"modified":"2023-11-22T09:23:04","modified_gmt":"2023-11-22T16:23:04","slug":"the-best-way-to-earn-a-243-percent-return","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/the-best-way-to-earn-a-243-percent-return","title":{"rendered":"The Best Way to Earn a 243% Return is By Not Timing the Market"},"content":{"rendered":"\n<p><span data-preserver-spaces=\"true\">If you\u2019ve spent any time researching investing in real estate (<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-vs-stocks\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">or stocks<\/span><\/a><span data-preserver-spaces=\"true\">), you have probably heard people throw around the phrase: \u201cTime in the market is better than timing the market.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The old saying originated from Ken Fisher, a billionaire investment analyst and financial advisor, and while Ken was actually referring to the stock market with this now-famous quote, the same concept is very much applicable to real estate investing as well.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Many investors are tuned into cycles enough to where they find success with timing the market, but spending more time in the market is a simpler, more sustainable approach for the average investor.<\/span><\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_655e2a964ca7d: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_655e2a964ca7d\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/the-best-way-to-earn-a-243-percent-return', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/the-best-way-to-earn-a-243-percent-return',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/the-best-way-to-earn-a-243-percent-return', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Why Try to Time the Market?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The primary draw of attempting to time the market lies in the potential of maximizing the profits and&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rental-property-cash-flow-analysis\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cash flow<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;on your deals. By purchasing a property at a low point in the market cycle and selling at a high point, investors will capitalize on significant returns compared to if they were to buy in the middle of a market cycle.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">In addition to the upside in profits, a lot of investors are able to mitigate risk when they buy their real estate deals during market downturns. If you can successfully time the market and buy deals close to market lows, you will protect your portfolio from substantial losses.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Risks of Trying to Time the Market<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">For any investor who thinks they have the ability to time the market, it can come with great risk. None of us have a crystal ball, so this strategy is impossible to execute consistently.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The real estate market is influenced heavily by interest rates, job markets, and other conditions unique to local economies. Most of these factors are outside of an investor\u2019s control and are very challenging to forecast.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">To time the market successfully, you need an unemotional approach and a little bit of luck. Anybody who attempts to time the market should not expect consistent results.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Hypothetical Scenarios<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">To fully understand the impacts of buying at different points in a market cycle, let\u2019s mock up a couple of scenarios. We\u2019ll use the Las Vegas market for this example, as it saw some of the most drastic price swings over the last couple of decades.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Scenario 1: Timing the market perfectly (buying in 2012, selling in 2022)<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">This example represents an absolute best-case scenario, where you buy at the absolute bottom in one of the hardest-hit markets and sell at the most recent peak.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/lasvegassun.com\/news\/2014\/may\/25\/home-prices-through-years\/#:~:text=The%20median%20sales%20price%20of,of%20%24315%2C000%20in%20June%202006.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">median sales price<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of a previously owned single-family home in Las Vegas was $118,000 in January 2012. Meanwhile, the median sale price of a previously owned single-family home in Las Vegas was&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/city\/10201\/NV\/Las-Vegas\/housing-market\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">$405,000 in August 2022<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Had you perfectly timed the bottom and bought a home in January 2012, and then perfectly timed the top and sold the home in August 2022, you would have realized a 243% return on your investment over approximately 10.5 years.<\/span><strong><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Scenario 2: Timing the market horribly (buying in 2006, selling in 2012)<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Let\u2019s take a look at somebody&#8217;s failed attempt at timing the market. They bought a home at peak pricing, assuming prices would continue to go up, and then sold the home at the bottom.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/lasvegassun.com\/news\/2014\/may\/25\/home-prices-through-years\/#:~:text=The%20median%20sales%20price%20of,of%20%24315%2C000%20in%20June%202006.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">median sale price<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of a previously owned single-family home in Las Vegas was $315,000 in June 2006. Meanwhile, the median sale price of a previously owned single-family home in Las Vegas was $118,000 in January 2012.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Had you perfectly timed the top and bought a home in spring 2006, then perfectly timed the bottom and sold a home in January 2012, you would have experienced a loss of 62% on your investment over approximately six years.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Scenario 3: Time in the market<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">In our final scenario, let\u2019s consider somebody who bought 20 years ago and who has simply held on during the waves of the market.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/money.cnn.com\/pf\/features\/lists\/q3housing04\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">median sale price<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of a previously owned single-family home in Las Vegas was $184,300 in Q3 2003. The&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/city\/10201\/NV\/Las-Vegas\/housing-market\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">median sale price<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of a previously owned single-family home in Las Vegas was $410,000 in Q3 2023.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Had you bought a home 20 years ago and ignored the several drastic market cycles that followed, you would have realized a 122% return on your investment over 20 years.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Time Horizon<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Time horizon is a huge factor here, as the general direction of real estate has always been up.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Looking back all the way to the year 1960, the median home price in America was only&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.google.com\/search?client=safari&amp;rls=en&amp;q=median+home+price+in+america+in+1960&amp;ie=UTF-8&amp;oe=UTF-8\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">$11,900<\/span><\/a><span data-preserver-spaces=\"true\">. Today\u2019s home prices, according to the Case-Shiller Index, are about $311,000. So, buying a home in 1960 and holding on to it through 2023 would have generated a gain of over 2,500%!<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For the most sophisticated investors,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/when-is-it-truly-the-best-time-to-get-into-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">timing the market<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;absolutely can supercharge your returns. But for real estate investors as a whole, each investor needs to carefully consider their financial goals, risk tolerance, and investment horizon to come up with a strategy that makes the most sense for them.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The most successful real estate investors should focus on buying real estate deals at below market value, regardless of market conditions. This way, if they mistakenly buy a property close to a market peak, they will have some&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-home-equity\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">equity<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;left in the deal as they weather a downturn.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_7e9413feb80593a808538cb7084b197f\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_65d73bbce2acf80b734ff51bbdb54ee0\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_77000944a94bdc7828b02377fccfe2d4 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/agent\/match\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Agent Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/the-best-way-to-earn-a-243-percent-return&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/the-best-way-to-earn-a-243-percent-return&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>If you\u2019ve spent any time researching investing in real estate (or stocks), you have probably heard people throw around the phrase: \u201cTime in the market is better than timing the [&hellip;]<\/p>\n","protected":false},"author":613703,"featured_media":162649,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7385],"tags":[],"class_list":["post-162645","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth-management"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/162645","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613703"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=162645"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/162645\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/162649"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=162645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=162645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=162645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}