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When To Buy Investment Real Estate

When people ask, “Is it still a good idea to buy real estate now?”, there are often two underlying problems.  First, is a loss of direction.  Second, “The Stock Market Mentality.”  Put simply, in the stock market, timing is all important.  If you don’t sell today, tomorrow your stock may be worth 50% less.  If you don’t buy today, tomorrow it may cost 50% more.  Fun, adventure and excitement.  Keep away from it.

Real Estate should be different.  Real Estate should be a long-term affair (most worthwhile goals in life are long-term – have you noticed?).  To make a lot of money in real estate short-term you have to be very skillful.  And somewhat lucky.  In fact, most people who invest in real estate short-term make $5,000 or $10,000 here or lose $5,000 or $10,000 there.  Big efforts.  Small results.

The people who really make it big in real estate play it dumb.  They buy a property today.  They hang on to the property for seven to 10 years or more.  Then maybe they sell it.  When they buy they are not sure that it is the right time to buy.  They may even overpay a bit for the property at the moment of the purchase.  Seven to 10 years later that property has doubled in value.  It all seems very boring; however, it just creates millionaires.

Thus, the smart investor’s attitude towards real estate investing is to play it dumb.  The market is up, the market is down, the market is flat or sideways.  Smart investors don’t care.  They just buy.  And then they wait.  And wait.  And watch their cash flow and equity grow.

But isn’t one supposed to sell at the peak of the boom and buy when things are down?  Yes, it is better to buy when things are down.  It was better to buy one year ago than it is to buy today.  It was even better to buy in 1990.  And even better to buy in 1980.  But you cannot turn the clock backwards.  You cannot change the past.  You can only plan for the future.

Now, would you like to know how to be able to identify the peak of a boom?  Would you like to know when it is absolutely a bad time to buy and when it is absolutely a good time to sell?

Here goes.

When you are unable to find duplexes or triplexes with break-even cash flow and all you find are properties showing a large negative cash flow, don’t buy.  Be patient.  The market will effect a correction and properties will eventually start selling at a price level where cash flows start to make sense again.  Or find another market where the numbers make sense.

Don’t decide in the abstract whether it’s a good or bad time to buy or sell real estate.  If you find a good property in a good market and in a good neighborhood that generates positive cash-flow, buy it.  (Just remember to have professional property management.)


  1. Comment by Ndy
    November 4th at 3:03 pm 

    Hi Marco,
    This is an awesome post.
    Thanks for sharing.
    Ndy

  2. Comment by Pierre Lasquare
    November 5th at 1:33 am 

    Interesting. But what about those investors that bought in Tokyo back at the end of the 1980s? There property is now worth 50% LESS some 25 years later… buying at the top of the market has caused thousands of bankruptcies but few seem to dwell on that fact.

  3. Comment by Marco Santarelli
    November 5th at 11:28 am 

    Hi Pierre — “investors” that bought property in Tokyo back in the 1980s were not real investors. They were speculators. They assumed they were parking their money in a safe place where they would continue to see price appreciation. That market became one of the biggest bubbles and crashed. They were NOT investing for *Cash Flow* – they KEY to a good (real) investment!

    Bottom line: Invest for cash-flow in good markets that make sense!

  4. Comment by Jimmy
    November 9th at 12:27 pm 

    What advice would you have for a beginning investor,I thought this site was awesome.

  5. Comment by Marco Santarelli
    November 9th at 1:12 pm 

    Hi Jimmy… My advise for a beginning investor would be to:

    1. Educate yourself as much as you can but don’t paralyze yourself.
    2. Read our free Ultimate Guide to Passive Real Estate Investing.
    3. Contact one of our Investment Counselors for a Strategy Session.

    Continued success!

  6. Comment by Anya Sharma
    June 13th at 2:53 am 

    Hi Marco Santarelli,thanks for sharing wonderful and informative blog.You can also add about property taxes i.e how long property can be kept and how investors can see the increase in the taxes for property.

  7. Comment by Laura Ludwig
    February 25th at 6:23 am 

    As the saying goes “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”

    Thanks for the useful tips.


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