The never-ending question for real estate investors is “When is the right time?” Whether you’re buying, selling or holding on to a property, timing is everything.
The real estate market can be fickle. One moment the market is ripe for selling, but before you get the chance, the market swings back and prices drop, making it an ideal time to buy. Even experienced developers and real estate investors fall into the timing trap. For example, developer Nile Niami recently finished a mansion and hopes to sell, but market prices in the LA area recently hit a slump. When Niami began the project, however, prices were great. He just didn’t make it quite in time to take advantage of the market.
So, what’s the lesson?
Research, research, research. Before making any decisions, research what’s going on in the market and get advice from experienced investors. Keep in mind that market trends can be industry-wide, but may also depend on location. Also, what’s true for the housing market may not hold for the commercial market. So, get as specific as you can in your research to your situation.
According to some research, steady growth for commercial real estate can be expected to continue over the coming years, but a slowdown is expected. This means that it may be wise to hold onto properties you’ve already purchased until the market turns up again.
That being said, as a general rule, buying and holding properties is a great strategy. This is especially true for new investors. Why?
Buy and hold real estate investing poses fewer risks than other types of investing and offers many benefits such as:
Once you get your property up and running, you’ll get rent income every month. This income is passive, meaning it requires little effort on your part to keep it coming.
Depreciation, mortgage interest, and property tax benefits are just a few advantages you’ll be able to report when tax time comes around.
Over time, a substantial real estate property will grow in value. You just have to make sure you wait long enough for this to be true. It’s not always easy to decide precisely when to sell, but you can almost guarantee a return on your investment when you hold the property for a while.
You’ll build equity on your property over time, especially since your mortgage will be mainly covered by the rental income you receive.
However, to take advantage of buy and hold real estate investing, you must make sure that you purchase a quality property and that you manage it well. Your success hinges on signing great tenants who pay on time and owning a property where you can achieve rents that cover your costs.
Seek an experienced professional to help you with your investing decisions and rental property management needs. With the right team on your side, your future in commercial real estate will be bright indeed.
More Investment Tips: 6 Different Ways to Invest in Commercial Real Estate
In the past, commercial real estate investment was something only an elite few could get involved in. Now, people are more aware of their options, allowing them to jump into this high risk, high reward segment of real estate. What are these options? Read 6 Different Ways to Invest in Commercial Real Estate