MAY 17TH 2017 -RP These days everyone is a real estate investor

These days everyone is a real estate investor.  Last week I went to a look at a 3 flat on the Northside of Chicago and there were 20+ offers on the first weekend.  It wasn’t always this way.  Remember 2008-2011 when the nation was still in shock from the subprime collapse?  Seems like a long time ago, doesn’t it?

Well, after nearly a decade of zero interest rates it seems as if everyone is hungry for property.  From the young couples looking to purchase their first home to the aspiring investor looking for a return on his cash, the real estate market can appear a bit overwhelming.

Back when I was finishing up College in the year 2000 the yield on a 1-yr CD was 5.6%.  The yield on a 5-yr CD was 6.2%.  Now I ask you, how many of the Johnny come lately Real Estate investors would even consider it if they could park their money risk free in a vehicle that returned them 5 to 6% a year?  My guess is that many people wouldn’t bother with the hassle of owning, rehabbing, leasing and managing their properties if they had those alternatives.

So where does this leave the Real Estate investor hungry for his first/next deal?  That’s the $64,000 question.  During periods of euphoria it pays to remain patient.  Focus on finding a deal that works and cash flows from day 1.  Don’t get caught up in bidding wars and stray from your core principals. Determine the maximum you are willing to pay for a property and stick to it.

The market will not always be so heated.  Plenty of people who have bought investment properties in the last year or two will not be around five or ten years from now.  Things will turn around eventually and when they do, you will be ready to act.