Real Estate Investor Articles

Despite conventional wisdom about when investors should buy, most investors are running spooked from our current market. With stocks at fire sale prices and falling house prices in most markets, you may be wondering, should I hold tight and not take any risks in this uncertain market, or should I jump in and "buy low"?

The good news is that if you choose to employ a long term strategy with real estate investing, then any market can be good for buying. It's impossible to know when a market will bottom out, and how far it will ultimately drop. But, if you use net operating income as your primary criteria for buying, then a house that will support itself supports itself, regardless of whether the price goes down in the months after your purchase.

A net operating income analysis ensures

Follow up:

that the price you buy your house for can be supported by the rent that you charge for it. With the record number of foreclosures we have seen, rent prices will likely be stable and over time will increase in most markets. This will occur, not only because former homeowners will be forced back into the rental market, but also because lending standards are tightening. With a scarcity of nothing down loans available, more potential homebuyers will remain renters, thus increasing the pool of prospects for your investment houses.

So, as spooky as the market may seem right now, if you are buying long-term rentals using a sound net operating income approach like we teach on our websites, then yes, now is the time to buy.

For help analyzing your next deal, please see our worksheet for calculating Net Operating Income.

Until my next post,

James