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When people consider taking the leap to start investing in real estate, one question always remains: Is now the right time to start investing? The longer this question lingers in the mind of an investor, the more difficult the proposition becomes. The short answer is yes. This is always the right time to invest in real estate. In terms of an asset class, real estate appreciates over time and provides investors with income that can lead to generational wealth.
Frankly, more people should be investing in real estate, but it takes planning, hard work, execution, and a little bit of luck. Most savvy real estate investors have stories that involve obstacles and barriers to their success, but they have found a way to maneuver through today’s booming industry.
Some investors give up too easily when something goes wrong or if navigating the current environment isn’t as easy as it used to be. Success doesn’t come easily, but these tips for navigating the markets and finding success can instill some confidence in investors who want to start investing or investors who are considering venturing into a different venture. There has been a lot of talk about the current state of the market, and there has been a lot of panic among investors. increased interest rates, which brings challenges in sports, but with the right tools and guidance, there is still plenty of opportunity for success.
Rising interest rates create opportunities
When it comes to investing in real estate lately, one thing comes to most people’s mind: interest rates.
Interest rates, inflation and a possible recession dominated headlines in 2022. However, the business still had a very successful year for a lot of investors across the country. Rising interest rates discouraged many investors, reducing competition and making it easier to find deals.
Interest rates are always a hot topic, and any change in them makes investors nervous. Usually, this stems from a lack of knowledge about the financial industry as a whole. Though the rates were extremely low at the beginning of 2022, they have rapidly increased to the range of 5-7% per cent.
According to Freddie Mac DataIn 1981, interest rates reached their highest point in modern history, when the annual average was 16.63%. The 1980s weren’t the best time to borrow money, but investors were still figuring out how to make it work. If people were successful before, you should be able to find success now.
“The 5.5% 30-year fixed mortgage is modest compared to average annual interest rates since 1975. Smart investors know that real estate is a long-term investment and rates today are still historically low. Expect rising interest rates. As of the writing of this article, there is no end in sight to our astronomical inflation rate. In a few years, it may seem prudent to buy now,” writes Marco Santarelli from Norada Real Estate Investments.
Rising rates have also affected affordability. The fall in prices is happening for the first time in many years. It is important for you to take advantage of this and create a strategy. With prices plunging and investors leaving the industry out of fear, now is the time to strike while the iron is hot.
Characteristics of the Investor That Can Weather Any Storm
Planning and patience are also two things you will need to start investing in real estate.
Think “where and what” instead of “when and where.” Ask yourself which markets you will invest in and which strategies you will implement.
Depending on the market, an investor needs to change the way they think about their strategy in order to achieve success. There are plenty of cities around the US, such as Atlanta, Cleveland and Nashville, where suburbs are exploding with growth.
In terms of strategy, what seems to be working right now is:
- long term rental
- ground-up construction
- short term rental (depending on location)
Patience needs to be taken care of, especially now. Real estate investing is known as a “get rich slow” industry. There is no overnight success or proven path that every investor must follow. Rather, it is patience and persistence that lead many investors to successful careers. Not every deal is going to close, not every asset is going to make money or abundance of cash flow, and investors will definitely consider skipping it once or twice. However, success is out there, and it is attainable for those who work hard and stick with it. Just when you think you are out of time, along comes a property that drastically changes a portfolio and gives the investor the spark they need to continue on their real estate investing journey.
Preparation and knowledge of the results of the breeds
Education is a big part of the puzzle when starting your real estate career. It’s a great time to start investing in real estate, but don’t measure success by whether you have a property in your portfolio as of tomorrow. Find small victories and build on those days. Take advantage of the educational opportunities out there and learn something new each day. Where the community is helpful, there are a slew of local REIAs (real estate investment associations) to join, and investors can find people who can be key to their success in the real estate investing space.
Online courses and YouTube are always a wonderful resource. On top of education, investors should be tapped into social media. Any source that can provide tips, tricks or breaking news to an investor is important.
If investors are always looking for knowledge, they are more prepared. This education lends itself to noticing market trends, realizing when times will get tough, and what other top investors are doing to navigate tough times in the industry.
Finally, finding a mentor is delicate. Having someone to talk to for advice, problem-solving, or just to vent about trials and tribulations can be extremely helpful to both new and experienced investors.
final thoughts
Now is the time to start investing in real estate. There is less competition, multiple paths to success, and an abundance of resources for investors to take advantage of.
Don’t let rising rates and a lack of experience come in the way. Again, expectations should be tempered, and success cannot be determined straight off the bat. But with the right strategy, tools, and mindset, success will come.
This article is presented by RCN Capital
Leading nationwide lender for real estate investment.
RCN Capital is a national, direct, private lender. RCN specializes in ground-up construction financing,
Short-term bridge loans, fix and flip financing, and long-term rental financing for real estate investors.
Know more about RCN Capital
Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
