One of the popular bits of advice you hear when investing is to put your money into real estate. The common advice is to invest in it as soon as possible. However, that is not the smart approach. Just jumping in with no idea of what you are doing can result in a bad investment. When it comes to real estate investing, timing is a key component. Here are some tips on how to know it is time to invest in real estate.
You Are Financially Stable
This is the most important factor. When you are investing, you should not be spending money that you can’t afford to lose. If you are thinking of sinking your savings into the investment, then you should reconsider. Being financially stable means that you don’t have to worry about paying any debts or that you will go hungry when you buy your new property. You should save up for the purchase while also solidifying your financial base.
You Have Funding Sources Available
As another part of the timing of your real estate investment, you should have funding sources. It is unrealistic nowadays to save up to buy property nowadays. Prices are so high that you can’t buy real estate without borrowing. This is where you need to look for mortgage companies offering competitive interest rates. Borrowing money to buy your investment property increases your purchasing power. But not every lender is equal. You want a mortgage company that offers you as much as possible with as low an interest rate as possible. Check out local lenders and who you can have access to so that you choose the right one. Interest rates change, and some lenders may not be available. If you don’t have a good mortgage company, then you might have to delay your investment.
The Conditions In The Market Are Right
The real estate market also needs to be in good condition for investing. For that to happen, you should be waiting for a buyer’s market. This is when there is a lot of inventory, and no one is buying. It can be a time of the year or a general trend. Many people buy investment properties during the winter for this reason. No one wants to move during the winter months, so there is no competition from simple home buyers. You could also wait for when the market is experiencing a slump so that you can get properties for cheap. Another option would be to look for properties that are not selling well at the moment.
After Doing Some Research
Another part of the timing in real estate investing is doing it after you have done your research. You need to study all of the potential options you have for the property. You also need to check for potential problems so you don’t waste your money. There are properties that might rise in value because of gentrification projects, but review all potential areas of trouble before buying any property in a “soon-to-be” gentrified neighborhood.
You Have Free Time
You might think that investing in real estate is going to be simply buying the property. Depending on what you want to do with your investment, you will have to do some work. If you plan to flip the property, then work to make it presentable and attractive to buyers. You can also develop the property into a rental one. That is a more complex approach, requiring you to be a landlord and maintain the tenants’ property. You can’t do all of these without some free time on your hands.
You Can Take A Risk
Finally, you need to be able to take a risk. If you have a family to support, it might not be the time to invest in real estate. While not as risky as other investments, there is still a potential for getting little to no return from your investment. You might even lose some money. If a financial loss like that will put you in a bad position, then it is a bad idea to start investing now. Wait a few years and have a more robust financial position. As long as you’re ready to take a loss, then you have a good chance.
Real estate investing might be lower risk than other types of investment, but there is still a range of failure. You might be only able to break even or not fully maximize the value of your investment. Make sure your move into investing comes at the right time so that you get the most of your new property.