When to invest in real estate

A couple of weeks ago, someone asked me when was the best time to invest in real estate.  I know when someone asks me that, they typically have some alternative motive.  My answer:  ANYTIME is the best time.  NOW is the best time.  There is an old Chinese proverb I like that says the best time to plant a tree was 20 years ago.  The second best time is today.  That applies to real estate.  If you look back over the past 30 years or so, look at the price of real estate and what was available then compared to what it is today.  Now consider, if I had purchased that house, it would be paid off now and how much would it be worth?  How much would I have collected in rent over these years?  How much in taxes could I have saved with the depreciation?  The list goes on and on.

Today, with interest rates being below 4% (5% for investment property), prices being flat for the past couple of years, you just can't get a better time to invest in real estate for long term returns or a residence.  Consider what savings accounts will get you from banks on CD's.  A local bank I was in the other day offered a 3 month CD a whopping .09%!!!!!!!!  Yes, you can invest for longer for .5%.  You'd have to get out to 3-5 years to get close to 1% interest.  Now consider a small single family residence with a decent down payment of $5000 - $10,000.  Assuming that property will give positive cash flow (NEVER invest in a house that won't either), you can expect to get modestly 5% - 8% returns.  Yes, there is a commitment there.  There is risk, potential expenses etc.  But, that return is AFTER considering those risks.  In a perfect world, you can and should get double digit returns on your investment.  I'm just more conservative with my numbers. 

There are so many ways to invest in real estate that are more secure than many other investments.  If you ever consider doing that, make sure you employ a good realtor on YOUR side that helps you along the way.  Having one on your side will be an invaluable asset that will help you along the way.

Have fun, enjoy the ride along the way.