HMW #133: Is it always a good time to buy real estate?

 Read Time: 4.25 minutes

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Is it too late to buy real estate? This is a common state of mind for new investors who sit on the sidelines, and a question we get asked a lot here at House Money Media.

I (Alan) bet you wish you bought real estate a few years ago when interest rates were 3%, right?  Or maybe you wish you bought real estate back when the purchase prices are were more affordable? Or do you wish you bought real estate when your successful investor friend/mentor named Alan told you to? 

Well, I continue to tell you to buy real estate because these 3 things never change when it comes to real estate timing. If you approach investing with a long-term investor mindset, it is indeed an evergreen buy time. Learn these 3 constants in real estate that makes any market a good market to buy income-producing residential properties.

Constant 1: Cash flow > home value

If a property cash flows for me but goes down in value by 50%, I don't lose any money unless I sell. If I hold on to it, it will continue to cash flow for me. Rents don't drop just because the home value drops.  The property will continue to produce income for you in any market until you choose to sell it, and you can choose to sell only in up markets.

The ones losing money are typically primary home owners who have to sell due to lifestyle demands that aren't flexible on timelines: marriage, divorce, job transfers, children, etc. Long-term buy and hold real estate investors are practically immune to these time sensitive decisions of when to sell a property and why rentals make such excellent long-term investments.

That's right! Predicting your successful future becomes easier with each investment!

Constant 2: Competition increases each year

Real estate will continue to get more difficult each year. There is and will be a housing supply shortage for the foreseeable future which adds a layer of difficulty, but there is also easier access to data, coaches, and investment classes (even like the ones House Money Media offers.) 

Waiting does not make things easier for any investor. Go out and get your hands dirty now and thank yourself in a few years once you have a few rentals under your belt. Just like you wish you did last year. Or the year before. Or the year before that. If you would have followed through you'd have 3 rentals under your belt instead of just waiting for the right time.

So, what can you do?

You are 100% correct!

Constant 3: Lenders get screwed on every mortgage 

Check out this lopsided partnership you can create with every real estate deal:  A partner that pays for 80% of the property. A partner that allows you to make every decision with regards to running property. A partner that can not alter the agreement or terms ever. However, you can change the terms if you find a better partner with a more attractive terms.

There is no human partner that would agree to that contract, but that is essentially every 30 year mortgage term. Lenders are stuck with it if it benefits you. You are not stuck with it if you can find something better and refinance in the future.  

And if you want other advantages of this 30 year partnership, I've written about this before. You can legally and ethically screw your mortgage partner on every deal and they will thank you for it and want to do it again and again. (Sorry to our mortgage partner, Jasmine.)

Note: Lenders don't actually own the property...unless things go very wrong.

Nope! You are only screwed if you don't start investing ASAP. Now is the time. 

Summary

• If properties cash flow on day one, often they will probably cash flow for life.
• You can change mortgage terms if you want, the lender can't.
• Investing can feel harder each year, so start now.