7 Reasons NOW Is a Great Time to Invest in Real Estate

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You work hard for your money, but does your money work hard for you? When you store your cash under your mattress (or in a bank if you aren’t a weirdo), it will produce next to nothing. However, when you put money into an investment, your dollars go to work for you.

Plain and simple: Investing is how you become wealthy.

But what is the best “job” for your dollars? How can your money earn the most and offer the least risk? In my opinion, one investment stands head and shoulders above the rest: real estate.

Yes, real estate is subject to timing; and there are times when real estate is not the wisest investment. However, I believe that right now might be the greatest time to buy real estate that we’ll see for another decade or longer. Here are seven reasons why.

1. Interest rates are incredibly low.

Although the “Brexit” scandal that just rocked the world and caused financial markets to tumble, there is one segment of investors who will benefit from the news: those with money tied up in real estate. Why? Two words: Interest rates. Low interest rates lead to low monthly payments, which is great for real estate investors looking to maximize their profits.

Interest rates, which have been at historically low levels for the past decade, have been slowly climbing over the past year, and until recently, most analysts believed that a series of rate hikes from the U.S. Federal Reserve was coming soon. But, with the shaky markets, the opposite has happened: Interest rates have dropped. According to a recent article, “The probability of a federal funds rate hike at the Fed’s next three monthly meetings has collapsed to 0 percent, and traders are assigning a less than 8 percent chance of a rate increase at all this year.”

Related: Even if You’re an Expert Investor, Catastrophe Can STILL Happen: This Story Proves It

Several years from now, we’ll look back and say, “Remember back in 2016 when you could get a mortgage under 4 percent? Those were the days!”

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2. Banks are lending once again.

In the collapse of the real estate market in 2007 and 2008, many banks tightened their lending standards to such a degree that obtaining a mortgage became next to impossible for many Americans. However, gradually over the past several years, banks have once again begun opening their vaults and relaxing their standards.

No, this doesn’t mean you’ll be able to obtain a 125 percent loan-to-value mortgage with no money down based only on “your signature,” as you may have done during the mid-2000s, but if you have a job and decent credit, obtaining a fixed-rate loan shouldn’t be impossible.

3. Prices are reasonable.

Yes, real estate prices have climbed significantly from their 2011 and 2012 lows. However, for those willing to hustle to find great deals, great deals can be found. This is especially true for investors who buy bank foreclosures. According to RealtyTrac, there were over 100,000 foreclosure filings in May of 2016, showing only a mild decrease over the past year.

For more on buying foreclosures, check out my article “How to Buy a Foreclosure: The Comprehensive Guide to Buying a Foreclosed Home.”

4. Technology has made investing significantly easier.

In the “olden days,” investing in real estate took a significant amount of driving around, talking to people, waiting, looking at hundreds of pages of documents and other difficult, time-consuming tasks. Today, technology has made investing in real estate significantly easier. For example:

  • Advertising units is as simple as posting to Craigslist.
  • Screening tenants can be done online through a number of screening services.
  • Handyman and cleaning services can be ordered online.
  • Tenants can pay rent online rather than in person.
  • Your agent can set you up with automated email alerts for new listings.
  • You can take virtual tours of neighborhoods using Google Street View.
  • You can invest in real estate passively through crowdfunding websites.
  • And so much more. Today, a real estate investor barely needs to leave the comfort of home to manage a portfolio of rental properties, thanks to technology.

5. Knowledge is free.

In the past, real estate knowledge was primarily taught by “get-rich-quick” gurus who traveled the country charging outrageous fees (up to $100,000) for “secret knowledge.” While this practice is still common, the internet has democratized learning in a way that makes real estate investing education completely free.

There are thousands of blog posts, ebooks, podcasts, forums and more sources that help real estate investors connect. BiggerPockets.com, where I spend my nine-to-five, is a good example. Millions of new and experienced investors come to our platform monthly to learn and grow as investors — for free.

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6. Your job is unstable.

While you might think you have a stable job, job security is not what it once was. Employers are all too happy to let go of hundreds or thousands of employees just so the price-per-share might increase a few percentage points. Efficiency is the name of the game, and your job might be on the chopping block.

Related: 4 Things to Do With Extra Cash in a Low Inventory Housing Market

Today, the best job security is enjoyed by those who take an active interest in gaining skills and knowledge that can be used elsewhere. Real estate investing is one of the greatest ways to gain financial independence so your job can become optional rather than required.

7. Ten years from now you’ll wish you had started today.

Finally, let’s talk about the big one: Investing takes time. I’m not promising you that tomorrow you’ll be rich if you start investing in real estate today. But I am telling you that in ten years you will likely look back at 2016 and say, “Why didn’t I start back then?”

As previously noted, we are now at a unique point in history where real estate investing just makes sense. Wait too long and you’ll miss out.

Of course, I’m not telling you that any piece of real estate is going to make sense. You still need to understand what you are doing. You still need to do the math correctly. You still need to hustle to find the 1-in-100 deals that actually makes sense.

But for those willing to do the work? The timing couldn’t be better.

[This article originally appeared on Entrepreneur.com.]

Do you feel that now is a good time to invest? Why or why not?

Let me know with a comment!

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.

10 Comments

  1. The reason NOW is not a good time in my community is because the properties will not cash flow at the prices people are paying. Just this week a property with a 3/1and a 2/1 closed for $950K. The asking price was $1.1M. Previously, there were two accepted offers, one at list price and the second a little less, but escrow failed to close both times. I suspect the home inspector found something. Nevertheless, the third time was a charm. The units are habitable, but that is about all you can say about them. Nevertheless, with no work at all by the new owner, they will probably rent for $2400 and $1700. What do you think of this deal?

    • Wesley Emison

      Almost every rent producing property will cash flow with enough money down. Barring a significant amount of money down, which will kill your ROI, I suspect the property you mentioned is more of an appreciation investment than a cash flow investment. Try looking further out of your community?

      • Well, in my town, almost every investor says he is investing for appreciation, not cash flow. Such a view is in opposition to almost every experienced investor’s advice. They almost all say run the numbers for cash flow, and do not buy if the numbers do not work. Appreciation should be considered frosting, not the cake. Of course, one way to maximize any appreciation is to defer the maintenance. Therefore, the quality of rentals in my town tens to be truly dismal. So we have the situation where my town is littered with crummy rentals that investors paid too much for.and charge too much rent. Then they defend the exorbitant rent by saying they need to charge high rents to cover the mortgages on the properties they overpaid. They get away with it because there is no competition in a town where 73% of the residents rent and the vacancy rate is 0.5%.

  2. Frank Boet

    Now is definitely NOT a good time to buy in Miami-Dade County. It is crazy expensive. I’ll wait for a pullback in the next two years to buy. In the meantime I bought home builder’s stocks KB Homes (KBH) and Zillow (Z) plus oil and gold stocks.

  3. ALLAN SMITH

    I don’t want to rain on any parades, but since no one can invest in the past, then the assumption would be that investing now is better than in the future.

    If that’s the case, #4 & #5 are null. Knowledge will be free for the foreseeable future, and technology certainly isn’t going to regress.

    But still, Those are 5 solid reasons.

  4. Jim Glover

    Hey Brandon – great article and I agree with most of your thoughts. That said I do feel that the current prices make it more difficult to get the Cash on Cash returns that I target. I was fortunate to get started at the perfect time and bought 10 houses in three years starting 2012 (I wish I would have bought 20!). That said I am enjoying the appreciation while at the same time hoping for a chance to buy more at discounted prices. I own 4 of the 10 completely and have pretty good 30yr notes an the other 6. I have been saving cash to buy more but just can’t find the deals right now. I am considering paying off 2-3 of the current houses with my cash and then watching the market closely for future opportunities. I am 50 now and would like to have them all paid for to maximize my passive income so I can retire between 55-60. (I have 1 in college and 2 more to go so retiring is not as easy as the 20 somethings in real estate might think – i.e. Kids are expensive–for a long time). What are your thoughts concerning using some of my cash to pay off a few of the loans? Thanks Jim

    • What about the view that the principal is more important than the interest rate? Most agents used the low interest rate explicitly to justify higher house prices. “With low interest rates, you can afford to buy more house,” they said, but what they really meant is you can pay more for any given house. Comparable sales based on these artificially low interest rates are too high relative to the fundamental value of the house. Maybe we should say fingers crossed that interest rates go up, so that house prices will go down.

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