If I made a dollar for every time a new real estate investor asks me if they should buy an investment house now, I wouldn’t need to borrow any money to finance my future fix and flip projects.
Like everyone else, you’re probably wondering about whether there’s any upside left in our current property market. And I’m here to tell you that the timing of your real estate investment is probably the least important thing to be thinking about, even if it seems like it’s the single biggest slice of the pie.
In my experience, there have been times when I shouldn’t have bought an investment house. The trick is that the economic conditions had nothing to do with it being the wrong time—my business wasn’t ready to do what I wanted it to do right when I invested. If that sounds confusing to you, don’t worry, it was hard for me to wrap my head around this concept, too. Let’s start to clarify the issue by thinking about what really matters when it comes to making any return on your investments: the state of your business relative to where it needs to be.
How To Frame The Question
When you’re wondering about “should I buy an investment house now,” there’s a handful of follow-up questions that you will need to answer before you can be confident in moving forward.
First, think about the purpose of the potential purchase.
If you’re looking for target properties to fix and flip, do you know if your preferred contractors are available to take on new work? Alternatively, if you’re planning to rent out your new hold properties, you should consider whether or not the rental market has enough activity to find a tenant quickly.
Figure out some of the essential characteristics of the market you’re thinking of investing in, and look for where you might find your profit margin. And remember, to increase your margin beyond the market’s average, you may need to either cut your costs or add more value in the form of renovations or tenant services. In particular, cutting the cost of finding new leads in an area is a highly underrated way to pad your financial gains.
Once you’ve addressed those issues, ask yourself about the financial condition of your business.
Do you have access to enough financing to be competitive in the real estate market that you’re considering buying an investment house in? At what interest rate do you expect to borrow money, and for how long will you be carrying the debt? Will lenders consider you to be an attractive debtor in the context of the deal you’re trying to make, or will you need to let them hold some assets in collateral to get them on board?
The purpose of these questions isn’t to scare you out of buying an investment house. Instead, it’s to get you asking, “should I buy an investment house now, given these factors” so that you can give a more nuanced (and complete) answer than a simple yes or no.
What You Should Know Before Buying an Investment House Now
You’re probably wondering whether right now is a good time to buy an investment house. The pandemic economy is weirder than ever, so I don’t blame you for hesitating. But, as I mentioned before, the answer depends on your business state and the characteristics of the market you’re looking to invest in.
The biggest thing to know about the question “should I buy an investment house now” is if you’re positioned well relative to your market, any time is a good time to buy.
It doesn’t matter if you’re looking to wholesale homes, build a portfolio of rental units, flip properties, or practically any other investing activity, as long as your business is ready to move in the right way for the market. And if there’s a mismatch, you’ll be ready to invest as soon as you identify and fix it.
So, as a real estate investor, the biggest thing to work on is increasing your competitive capabilities by using the right tools.
That means you’ll need to have solutions in place for things like:
- Finding leads
- Valuing properties
- Marketing to potential tenants or buyers
- Performing maintenance or renovations
- Financing property purchases
The more difficulty you face with each of these issues, the more likely it is that you won’t be able to make your investment profitable. The reverse is also true. And each step of progress that you make towards simplifying your operations and reducing your costs relative to those tasks, the more effectively you’ll be able to compete regardless of the economic conditions or peculiarities of any given market.
Planning Makes Your Investments Perfect
In short, once you’re on top of your game, it’s easier to know the answer to “should I buy an investment house now,” and it’s also much easier to confidently say yes. Of course, getting to that level of competency is easier said than done, and for many real estate investors, it can take a few years.
For investors that want to start down the path to being competitive in any market and do it sooner than they might otherwise, becoming a HomeVestors® independently owned and operated real estate investment franchisee is a wonderful option. With HomeVestors®, franchisees have direct access to financing for qualifying purchases and repairs for holding or flipping, not to mention ValueChek® property valuation software, the nationally recognized “we buy ugly houses®” marketing campaign and lead generation platform, and an entire network of experienced investors and a Development Agent for your franchise that is ready to provide mentorship and advice.
To top it off, HomeVestors® franchisees also get extensive training in real estate investing to help them be equipped to handle the conditions of any market or macroeconomy. Once you’re working with HomeVestors®, you’ll have all the pieces of information that you need to decide “should I buy an investment house now” for yourself, and you’ll be a far more capable investor as a result.
Still wondering “should I buy an investment house now”? To learn more about our franchise program for investors, check out our franchise consideration page.
Each franchise office is independently owned and operated