Wait for market correction for first investment?

11 Replies

I am 21 years old in Omaha, Nebraksa. I have a good credit score and some money saved up for an investment. I also have a few friends who are open to partnering on our first real estate deal. If possible, I would like to skip the SFR phase most investors go through and begin investing in multifamily. However, we are all open to flipping a few houses to generate some capital for future buy-and-hold investments. (I have a pretty good understanding of construction and electrical).

Because the market is very hot in Omaha right now, I have been told it might be smarter to wait about a year for the market to correct itself. I have been analyzing deals and have not found anything that appears to be a good "value-add" opportunity.

What advice do you have for my situation?

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch

As long as you’re willing to wait until 2025 or 2030 and hope for a 2nd “once in a life time crash” I say wait. Otherwise I say you’re going to be paying more in a year and you will have lost the income and experience you coulda already had. 

Nothing  like hoping for the economy to crash and crash hard, I assume you’re also hoping that when this massive crash comes and everyone loses their job and their house, because of your magic, you won’t. 

Two things...

Las Vegas, the prime example of housing crashes and bubbles, has dropped more than 5% ONCE, in its entire history. That means the people who have been waiting for at least 3 years for the crash are paying 20-30% more than they coulda paid 3 years ago. They are on their knees praying for a crash to being the prices back to where they coulda bought off the MLS for back then. But it's more likely they want an excuse so they don't have to take any action

Secondly, as a wise BP member once said “What makes you think you’ll have the courage to invest during a recession if you lack the courage to invest during a history making economic boom?”

@Bill Brandt Thanks for the advice. I think I am going to try harder to creatively find deals that aren't listed. Although we are experiencing a great economy right now, I'm sure there are plenty of people who are under pressure to get some money or sell their home because of their circumstances. Any ideas/strategies on how to find these people other than simply asking around?

The things that come to those who wait, are the things that are left behind, by those that got there first.

You can make money in any market, at any time.  You just have to know how money works, and use that knowledge to design a strategy to use money that makes you money on any particular deal.

The future belongs to the bold . Sitting around waiting for a crash is about the worst strategy out there . Be like Nike and just do it .

It’s really hard to get ahead if you never get started

- mark twain

@Colten Adams beginners trying to time the market are years away from buying a deal. I've been around enough by now that I'm convicted in that sentiment.

Where we're at in the market probably means buying retail isn't a great strategy. But there are deals everywhere. It's your choice to go find them.

I've also noticed that people waiting on a market correction aren't waiting on a correction, they're just using it as an excuse to not buy a deal today. So my question to you is what's really holding you back?

@Colten Adams I have several pieces of for your situation, most of which you’ll probably not want to hear.

1. Trying to time the real estate market (or stock market) is ALWAYS a bad idea. Warren buffet doesn’t do it, and he’s smarter than both you or I.

2. The best time to invest was 20 years ago. The second best time is now. So get started.

3. Back to the point of timing markets, if you can’t invest now in a booming economy, do you really think you’ll invest in a recession? I bet you wouldn’t.

4. If you’re in school, finish school, don’t worry about real estate right now

5. Don’t partner with friends if you enjoy their friendship.