Wait for downturn in market or purchase first rental now?

[Jesse Spaur]

I have 75k saved and ready to purchase my first rental property. Prices in my area are high but interest rates are low . Should I wait or start looking to buy now?

[Erik W.]

Please don't buy now.  The downturn is going to clobber us all.  Just sit on the sidelines and do nothing while waiting for it to come.

Meanwhile, I'll be.... um... sitting out with you.  That's right.  I certainly won't be buying any houses below market value and making a killing while my competition sits on the sidelines.  ;-)

Okay, I've had my fun.  You don't know when the next downturn is coming.  Neither do I.  Here is a list of all the things neither of us knows:

1) When it will start

2) To what extent prices will drop

3) How long it will last

You could sit on your hands for an entire market cycle doing nothing except worrying that you aren't at the "lowest" possible price.  That's trying to time the market, and it is impossible.  No one can do it consistently, and most people can't even get it right one time.  Check out the movie/book "The Big Short" and you'll see that out of 1 million or so financial "experts" in 2007-2009, only a handful of people got it right, and even then a few of them almost lost their shirts by diving in too soon.

Bottom line: get out there and learn your market.  If you can get good cash flow, you'll be able to survive even if values dip 10%,20%,30%.  Cash flow helps you weather the storms.  Be sure to have reserves built up.  Don't spend your last $ buying a place that has you "feeding it" $500/month out of your own pocket today while the market is still hot.