When and Where to Invest in Real Estate

Real estate is one of the most attractive and lucrative markets for most investors. You have done your research and now know every important detail about investing in real estate, but how do you know it’s the right time to invest? Most importantly, where exactly do you invest. Timing is everything, and so is the location. These two hand in hand and help to determine the profitability of your investment. First, let’s look at when you should invest in real estate.

When to Invest in Real Estate

When it comes to real estate, you should carefully consider the time for investment because it is as important as the investment itself. So is there a right time to invest in real estate? Yes, here is an introduction to the best time to invest in real estate.

When You Have Financial Stability

For obvious reasons, you will need to have some form of financial stability before investing in real estate. It is a very profitable industry, but you will have to pump thousands, if not millions to get started. Also, you will have to think about mortgage interests and other costs that are linked to real estate investment. For instance, the median listing price for housing in the US is currently at $349k where you are required to pay an upfront amount of about 3% to 20% as the downpayment. You might also be required to pay between 2-5% of the purchase price. So if you decide to jump on the bandwagon, you will need to be financially stable for you to afford such costs including the purchase price without a struggle.

When You Have Fully Researched About the Market

It goes without saying, it is important to research about real estate before investing because it can be complicated. You don’t want to lose your investment or make mistakes that will burden you in the long run. So do your due diligence beforehand to avoid risking losing your property or unnecessary hurdles along the way. Ensure to do an exclusive rental property and real estate market analysis before investing.

When It Is a Buyers’ Market

Supply and demand will affect the real estate market, causing fluctuations. This sets the difference between a buyer’s market and the seller’s market. A buyer’s market happens when the supply surpasses the demand. As such, sellers offer ridiculously low prices to attract buyers because of the long period of time it takes to get the property off the market.

A seller’s market is the opposite and happens when the demand surpasses supply, which means that the number of interested buyers is higher than the available property which increases the property prices. When buying property, remember to check whether the location is experiencing a buyer’s market. Not only are inventors moving down to Florida, but so are financial advisors who are looking to take advantage of the boom. 

Consider The Time of The Year

Yes, the time of the year determines how the real estate market is, winter and spring are the best times of the year to invest in real estate. During winter, young families find it hard to move and what’s more, people during that time are usually more focused on Christmas festivities. So the demand for real estate is usually very low when compared to other seasons throughout the year. Also, low demand means that you have several options to choose from.

You could also take advantage of spring to invest in real estate when the demand is high. Just ensure that you are prepared with enough cash for the property you are interested in. Also, a mortgage pre-approval letter would go a long way to set you apart from the rest of the interested buyers.

However, you don’t have to wait around for the perfect time before investing, if a good opportunity comes your way any other time of the year, then don’t hesitate to grab it.

Where to Invest in Real Estate

As mentioned before, the location of when you make your investment is also important. As such, below is how you know the location is perfect for real estate investment.

Growing Economy

If you are going to choose a location for real estate investment, the first thing you should look at is the economy. A growing, healthy economy is always a good indicator for a perfect location for real estate investment. When the economy is growing, it means that the real estate market is also thriving. As well, a bad economy also translates to a poor real estate market. So ensure to check how the economy of a place is doing before injecting capital into an investment.

High Employment Rate

The employment rate is also an important factor to consider beforehand. What’s more, when an economy is growing, then job creation is automatically high. Check for an area with a high employment rate, the demand for housing will be high because residents there are more likely to afford to pay for rent.

Quality of Life

When the quality of life of a place is high, then chances are that people will be rushing to become residents of that place. From top-notch education to security, hospitals, proximity to malls, restaurants, and recreational centers, these are some of the factors that people consider before moving to a certain place. Similarly, when buying an investment property you will need to confirm the quality of life of a place. 

Increasing Population

An increase in population drives the demand for housing up. And in most cases, population grows as a result of a rise in the other factors such as the local economy, employment, business-friendly environment, and quality of life, etc. An increasing population is a sign of growth which has a direct effect on the real estate market. Hence, a need to increase supply to meet the increasing demand.

The Bottom Line

Regardless of the type of real estate you intend to invest in, familiarity with the key factors that drive the market is vital. The aforementioned factors will help you make better decisions before investing in real estate. Understanding different factors regarding when and where to invest in real estate is an important part of assessing your potential real estate investment. While it would be hard to find a market with all factors in the perfect state, a combination of most of them is a good cue for investment.