In this episode, we talk about the real estate bubble. Is it real, or is it just the made-up theory that the experts were trying to scare people with? Also, we ask, when is the right time to buy investment real estate?
Is the real estate bubble real?
Let’s start off with the real estate bubble. I get this question a lot. So there’s this bubble that we keep hearing about and all the experts talk about the real estate bubble. Now, there is a bubble, but in the conversations I’m having people are asking me is this another 2008? are we going to see a collapse? Though I don’t have a master’s in economics, I believe the driving force behind the collapse in 2008 was bad loans backed by the federal government in the multiples of millions. These were loans that were backed as stated income loans, where people just said, hey, I make $300,000 a year, and they just wrote you a loan if you pulse; if your heart was beating you got the money.
This bubble, that’s come, is nowhere near gonna be as catastrophic as 2008. So everybody just needs to calm down and relax about the bubble. Memphis has been ridiculous the last three or four months with people buying property as if they’re about to put a moratorium on buying homes, period, and that you’ll never be able to buy another house until the end of time. Buyers are paying 20, 30, 40 thousand dollars over market, so yes, there is a bubble, and it’s going to correct.
When is the right time to buy real estate?
I’m baffled by this every year. Come mid-March, the phone starts ringing off the hook, and property investors are calling us from around the world and all across the country wanting to buy, they get hot and heavy, and they start throwing money around buying real estate as fast as we can get it.
I encourage many investors to walk away from deals because I don’t think it makes financial sense. Some go for it. Some don’t. It’s not my job to make that decision, but rather it’s my job to guide them and give them my best advice. What I don’t understand is that investors want to buy up everything they get their hands on between March and August and, come the end of August, then they just go silent. I say October through February is the best time to buy investment real estate, and here’s why. In the Fall, the market has cooled off and there are fewer buyers than properties, so you can get better deals on properties. Your ROI on your investments is going to be a better deal versus going on and competing against 30 other investors when the real estate market is HOT, and maybe 20 homeowners are competing and you end up overpaying for something that you could have got for a lower price if you’d just waited.
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