www.akerahomes.com
mfrentz@akerahomes.com
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Current Market
Calgary's house prices have been rising and people have been excited! Even will low oil prices it seems Calgary may see a decent up trending market in 2015 (though it may be too early to tell and it will be interesting to see how the spring market plays out). Since our market low in 2010 we have steadily seen an uptrend and as the market has trended, so too have average people jumped on the band wagon of purchasing real estate in Calgary. I want to make two basic points in my post today: 1) Anytime is a good time to invest in real estate if you know what you are doing and how to analyze a good vs. a bad deal and 2) Generally speaking the best time to purchase is not once the market has been trending up for 5 years!
When is The Best Time?
I have heard many wealthy people, including Warren Buffet, make statements along the lines of: 'When people are greedy, it's time to be scared and when people are scared, it's time to be greedy'. I'm pretty sure this idea has been one that many wealthy people in the past few hundred years have had in their minds when they invest. So... when is the best time to invest in real estate in Calgary (or anywhere else)? The answer is when the market has tanked and everyone in a city or country is talking about real estate in negative terms (2008-2009 in many US cities is a perfect example). The best time to invest in Calgary; the time when it was easier to maximize many aspects of real estate investing, was 2009-2010. During that time a person could negotiate a great deal on a property because there were more sellers of real estate than buyers of real estate (supply and demand is always at work).
Having made that statement, I also want to encourage anyone interested in real estate investing by my next statement: The best time to invest in real estate is NOW! As long as a deal qualifies as a legitimate investment (Cash flows after ALL expenses both short and long term are accounted for) a person will have a sound investment no matter at what point in the market that investment is purchased.
When is The Worst Time?
The absolute worst time to purchase real estate as an investment is when the deal doesn't make sense. Period! That's all there is to it. When does a deal not make sense? When it puts you at risk of losing the property. That usually means the investment doesn't cash flow, but there are other factors. Even a cash flow negative property will often create a lot of wealth for a person long term if they can cover the costs of the property for the first 5-7 years, but I would never in a million years encourage someone to get into a situation like that.
My Advice
On one hand I would advise most people getting into Calgary real estate not to invest right now unless it cash flows $200 after ALL expenses. I would advise you to learn and educate yourself and set yourself up for the next hit on the market. This may be in 3 years and may be in 10 years, but if you are wise and save up a lot to invest and improve your credit, you will be well situated to maximize that money in low risk investing. If you don't know a lot about real estate investing start asking people who have been in the business for some time. Most investors I know who do well in the business will gladly give some of their time to a new investor to guide them along over a coffee meeting. People who are the most successful tend to also be the most willing to help others out. When in doubt, fill out a contact form for me to contact you and I would be happy to discuss these and other investing ideas with you.
Here's to your future of risk-averse investing!
If you would like to learn more about investing in real estate please
contact me at the email address listed at the beginning of this article
or go to my website at: www.akerahomes.com/investing-in-real-estate.html
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