Is this the right time to buy real estate?
With rising interest rates, there are two questions that I hear from investors
Is this the right time because interest rates are rising?
The prices have been falling. Will they fall further?
Since my audience is busy working professionals, who see themselves working into the foreseeable future, you are most likely investing in real estate for appreciation and not cash flow. Meaning, you are not looking to live off of rental income right now. In the distant future, you are looking to sell the property for a nice profit so that you can invest the proceeds in another property or if the mortgage is paid off, you want to supplement your income with rental income.
I say, invest as long as the numbers work. What numbers should investors be looking at?
- Does the rental income minus minus property management fee minus repairs cover the PITI (principal, interest, taxes and insurance)
- How much down payment do I need to make?
- Do I have adequate reserves if there is a vacancy for 3 months?
- Do I have adequate reserves to cover a major repair (HVAC or Plumbing repair)
- Remember that time in the market is better than timing the market - don’t discount the learnings that you get from closing transactions and managing the properties
Check out a freebie cash flow calculator that I created so that you can figure out in 5 minutes or less if the numbers work for you.
Head over to my website at https://www.thefirelabs.com/five-minute-deal-calculator/ to download your free 5-min cash flow calculator.
Thanks for listening!