Here’s why it is still a good time to invest in real estate.
Real estate has always been a place where you invest a part of your portfolio, but it’s different now. Prices are through the roof, which is great if you’re selling, but how does that affect investing? Is real estate still a good investment?
I think a lot of new investors feel that way right now. They might be looking at prices and thinking they’ve missed the boat, but that’s a bad way to see it. Here’s a good metric for investing: If you are too late, then it was never worth doing. If the investment was only good for a short time, how good was it really? It had no staying power.
With real estate, it goes back to a lack of understanding. Most people base their real estate decisions on what they paid for the property. If they got it for less than the asking price, then they think they got a sweet deal. I saw this time and time again during the economic downturn. New investors were celebrating their deals with champagne.
Let me try to rewire your brain. The bank offers the house for $225,000, and 15 people put in offers on it. You win that house, but riddle me this: Why did you win for less than asking? The market wouldn’t bear a price of $225,000, so you were willing to pay more for the property than anyone else. If the other offers were better, you wouldn’t have won the home.
The list price is a mirage, but that doesn’t mean you’ve wasted money. You still control the asset, and that is a good thing. A true investor never buys off of the mirage. They look at the property long-term because that’s where the true value is.
If you have any questions about this or real estate in general, feel free to call or email me. I would love to hear from you.
