You’ve Waited This Long…Why Rush to Buy?

Posted by Robb Terranova under Buying Real Estate | Read the First Comment

Every time I evaluate a deal, there is a better chance I will do nothing at all than take action.  Good deals are far fewer than bad ones, and I’ve made a lot of money in real estate NOT buying something.

With all of the low prices, distressed properties and desperate sellers out there right now, it is really tempting to start snapping up bargains.

But the wise move may still be to wait.   If you are buying real estate right now, there’s an argument to be made you are either rich, brave, or foolish.

You’re rich: You’ve watched as real estate prices plummeted. Now signs of recovery mean it’s time to invest. If you have the spare capital, you stand to make a lot of money in this market of incredible opportunity. You can afford to gobble up the discounts and hold them for three years. It’s great to be you, and you are part of a fortunate and elite crowd.

You’re brave: You have both ends of the financing worked out, and you buy bargains to sell, for the most part, at small margins. Most likely you are forced to run a volume business. Do enough deals and you can still cash in on the current market conditions. But you are probably working yourself sick to make the same money that will take half the effort as the market improves.

You’re foolish: You know you can get bargains, so you buy them any way possible. But did you plan how you are going to get rid of them? If you’re trying to make a killing and price your resale high, your short-term financing may come due before you can resell. Quick sell it at a discount, and you may have so little margin by the time you unload you could wind up breaking even. If you get stuck holding, you still have to pay off your short-term lender. The unhappy possibilities are endless.

You could be wise. Even though there are juicy discounts out there, as the siren song of equity beckons, you could remind yourself about the resale profile of your deal in this market. It’s simple, really: don’t buy, and you don’t have to sell. You’ve waited all this time, maybe there’s wisdom in waiting just a little while longer.