Buy now, or wait for a market crash?

Question

What is the concensus? Right now the real estate market is hot, and properties are selling way over value and when something is  available for a reasonable price it is snatched up instantly.  It appears that the high sale prices are not stopping people or investors from buying,  so my question is,  is it wise to buy a property at an inflated price which in turn makes it harder for the numbers to work,  or save my money for when the market turns,  and properties are being sold at a reasonable price?

Joe Villeneuve · Answer

You buy based on the deal.  It doesn't matter if the market is hot or cold, it's the deal that matters.  Now the market may influence the deal, but that's part of the analysis at that time to see if in fact you have a deal...and not just an available property.

Jerry Lucker · Answer

@Richard Hadley

Without getting complicated, buy low, sell high.

Market high now. Wait until supply becomes plentiful when assistance runs out and foreclosures increase. You’ll recognize the crash, as in 2007, 2008 etc. when properties dropped pretty much 30% to 40% across the board.

Joe Villeneuve · Answer

...and, if you wait until the market crashes, because the cost goes down, don't the property values also go down.  After all, aren't the prices based on the current PV's?

Knowledge is a lot like REI.  You invest to make money, you read to gain knowledge, and you don't make money based on the "bookends", make it on the "books" in between.

Edward Sharp · Answer

If you find a cash flowing property with numbers that make sense, then I’d buy it now even in this seller’s market. Over the long run (20 years +)  it will probably appreciate regardless of any short term (5 year) crashes or recessions. However, Jerry has a great point. Waiting for a market shift would allow you to attack deals in a buyers market, which is ideal. At the end of the day, a cash flowing property with good ROI can be found in any market, so just keep analyzing deals.

P.S. Colleagues and I are finding it near impossible to get offers accepted for buyers, even going over market value, huge escalation clauses, and waived inspection/appraisal. So waiting would not be a bad idea. Cheers.

Theresa Harris · Answer

Buy based on the numbers.  Don't overpay and if the numbers work on a place, buy it.  If you wait for the market to turn, you could be waiting a while.  No one knows what will happen.

Michael Plante · Answer

When was the last crash?so by the logic of waiting for a crash no one would have bought since the last crash not my idea of sound investing

BTW who has an 8 ball that tells them when a crash is going to happen?

Connor Johnson · Answer

The numbers are always the most important. The great thing about real estate investing is that no matter the market, deals are always available. What would it mean to you to be able to find a great deal on a monthly basis that fits with your strategy?

Joe Villeneuve · Answer

Not true.  Buying and selling are the bookends of real estate investing.  Bookends hold books together and much like knowledge are in the books between those bookends, profits are in between the bookends of REI.  It's not about buying low and selling high.  This isn't the stock market.  It's about the spread in between the buy and the sell, and what makes the spread what it is, comes down to the terms.

I can have my purchase price for a property higher than another investor, and sell that same property for a sales price less than that same investor whose PP was less than mine (same property), and my cost will be less up front, in total, and I will make more money from beginning to the end.  It's all about the terms.

Buy now, or wait for a market crash?

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