The cyclical, sporadic, speculative nature of the stock market over the past decade has trained investors to chant the mantra “Buy low, sell high” every time they think about pulling the trigger on another deal. While this way of thinking might make perfect sense for today’s Wall Street assets, those interested in diversifying into income property investing should take heed that the phrase will not serve them as well in this new arena. To learn the proper way to profit with real estate, the investor should pay heed to the “buy and hold” strategy that used to permeate the stock market, at least up until the mid 1990’s, but which now is an invitation to have your head lopped off by the next price ricochet.
Creating Wealth Show host, Jason Hartman, has a phrase that perfectly explains how to approach income property investing successfully. He says, “Don’t wait to buy real estate; buy real estate and then wait.” The thing to focus on is that income property is an intrinsically different asset than stocks and bonds. The big difference is cash flow generated by rental income. With ever-fewer stocks paying dividends, cash flow from a Wall Street investment is essentially nil for the foreseeable future.
Waiting for the perfect real estate deal to come along can cost you big time in rents that you could have been collecting which, depending upon the number of the units the property has, could be a substantial loss. It’s better to put your capital into the game as soon as possible than to sit on the sidelines waiting to strike. What you should be aware of is that there are great deals to be had around the country right now, any of them which could provide a positive cash flow next month! Meanwhile the property is appreciating with each passing year (normally) and you’re also enjoying the benefits of the most tax-favored asset in America today.
That’s why we’re of the opinion that “Buy low, sell high” is a sucker’s bet when it comes to income property investing. It is destined to leave you out of the game trying to pin an absolute bottom to a cycle, when it really doesn’t matter that much. Capital hard at work – that’s the key to winning in real estate.
The Creating Wealth Team
