Should you invest in real estate now?

This is the most challenging question to answer in today’s market. On one hand, residential property prices are at an all-time high, which could understandably feel risky to engage in property investment. 

Yet with super-low interest rates and signs of inflation right around the corner, buying real estate could be an attractive way to make a profit in the near-term. 

So, which is it? We’re about to find out. 

Risky business: short-term vs. long-term outlook

The current real estate climate is aptly described by investor Dave Meyer on his YouTube channel Bigger Pockets. “There’s a lot of short-term uncertainty right now and it’s harder to predict what will happen even through the end of 2021, let alone into 2022 and beyond.”

It all comes down to your financial goals. That is, whether you’re focusing on a short-term or long-term real estate outlook. Due to dwindling market conditions, it could be risky for real estate investors to buy into the market right now. 

But as Meyer points out, “Nothing has really changed about the long-term prospects of real-estate investing. Owning a property for 10, 20, or 30 years is still one of—if not the single best way—to build wealth, regardless of when you buy.” 

Should I buy a rental or residential property?

When you purchase a residential property, you’re only making a profit when you sell it. That could presumably be years down the road. However, by investing in a rental property, you’re looking at a steady passive income stream, with a great return potential even in an unstable market. 

Not everyone can afford homeownership, depending on what stage of life they’re in. This means there are always going to be people who prefer to rent rather than pay a mortgage. 

Real estate buyer vs real estate seller

Despite the pandemic, total home sales shot up by 22% over 2019 statistics according to the National Association of Realtors (NAR). That’s the highest annual growth rate since 2006. In December 2020, home prices also increased by roughly 13% YoY compared to 2019. 

Experts suggest that it’s a good time to be a real estate seller instead of a real estate buyer. In the current market conditions, you can make a fortune selling homes for top dollar. It’s similar to stock investing: you profit when buying low and selling high

But wouldn’t low-interest rates benefit you as a buyer?

As mentioned, interest rates are at an all-time low. But this trend benefits homebuyers (who intend to live in the property) more than it does real estate investors. It’s highly unlikely that banks will award you the lowest interest rate possible. 

That’s because investment properties are considered riskier by lenders; therefore, real estate investors typically pay a higher rate compared to other homebuyers. 

What about flipping homes?

The current real estate market doesn’t favor house flippers. Kuba Jewgieniew, CEO of Realty ONE, advises against flipping homes right now. “Do not try to buy homes to flip right now. Buy it and hold it long-term, and focus on cash flow,” he said. 

There you have it: aspiring investors can roll the dice, and if your eyes are on the long-term, you’ll be in good shape. 

Yet with super-low interest rates and signs of inflation right around the corner, buying real estate could be an attractive way to make a profit in the near-term. 

So, which is it? We’re about to find out. 

Risky business: short-term vs. long-term outlook

The current real estate climate is aptly described by investor Dave Meyer on his YouTube channel Bigger Pockets. “There’s a lot of short-term uncertainty right now and it’s harder to predict what will happen even through the end of 2021, let alone into 2022 and beyond.”

It all comes down to your financial goals. That is, whether you’re focusing on a short-term or long-term real estate outlook. Due to dwindling market conditions, it could be risky for real estate investors to buy into the market right now. 

But as Meyer points out, “Nothing has really changed about the long-term prospects of real-estate investing. Owning a property for 10, 20, or 30 years is still one of—if not the single best way—to build wealth, regardless of when you buy.” 

Should I buy a rental or residential property?

When you purchase a residential property, you’re only making a profit when you sell it. That could presumably be years down the road. However, by investing in a rental property, you’re looking at a steady passive income stream, with a great return potential even in an unstable market. 

Not everyone can afford homeownership, depending on what stage of life they’re in. This means there are always going to be people who prefer to rent rather than pay a mortgage. 

Real estate buyer vs real estate seller

Despite the pandemic, total home sales shot up by 22% over 2019 statistics according to the National Association of Realtors (NAR). That’s the highest annual growth rate since 2006. In December 2020, home prices also increased by roughly 13% YoY compared to 2019. 

Experts suggest that it’s a good time to be a real estate seller instead of a real estate buyer. In the current market conditions, you can make a fortune selling homes for top dollar. It’s similar to stock investing: you profit when buying low and selling high

But wouldn’t low-interest rates benefit you as a buyer?

As mentioned, interest rates are at an all-time low. But this trend benefits homebuyers (who intend to live in the property) more than it does real estate investors. It’s highly unlikely that banks will award you the lowest interest rate possible. 

That’s because investment properties are considered riskier by lenders; therefore, real estate investors typically pay a higher rate compared to other homebuyers. 

What about flipping homes?

The current real estate market doesn’t favor house flippers. Kuba Jewgieniew, CEO of Realty ONE, advises against flipping homes right now. “Do not try to buy homes to flip right now. Buy it and hold it long-term, and focus on cash flow,” he said. 

There you have it: aspiring investors can roll the dice, and if your eyes are on the long-term, you’ll be in good shape. 

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