When is the right time to buy an investment property?

September 26, 2012 - Updated: September 26, 2012

I get asked this question all the time...is it the right time to buy?   What direction do you think the market is going?  These are loaded questions, predicting it in a volatile market such as this is not easy and quite frankly if I was right all the time..I would have retired by now.

Buying a real estate property is a major decision to make, probably the costliest one in your life. It involves making investment of your hard earned money and you want to make sure that you get the best out of it in return. Whether it is the right time to buy a property will always depend upon many circumstances that you need to consider. The answer is not an absolute yes or no but it always depends on many factors.

When buying an investment property whether it be commercial or residential, your primary consideration is to ask yourself is it a good investment to make?  Ideally, like in the stock market you want to buy low and sell high.  This requires you to buy at the right time.  Surprisingly many don't take advantage of the market when it is low.  They are driven by some kind of fear ex: the recent 2008 financial crisis, so you might be a bit spooked to take advantage of the low prices because everything seems to fall apart.  The uncertainty bothers many of us.  Remember one thing...markets will always recover, might be six months, one year, two years..but they will recover.  Ideally, the right time to buy an investment property is when everybody else around you thinks you a nut for buying investments.  Nut or not this will ensure you reap the biggest profits when the markets do eventually recover.

So is it not the right time to buy in a normal or heated market??? Of course you can buy at these markets as well and most do.  We can't wait forever for the next recession to come along.  The great thing about real estate properties are, they are good investments to make as the value of the property tend to rise in the long term.  So even when you buy in a normal or hot market you will make money as long as you are willing to hold the property long term.

It is also most prudent to procure a property when you are financially stable and you know that you can afford buying the property without straining your finances.  In any market condition, your financial affordability factor is the most important consideration when deciding on the right time to buy.  Make sure you have enough money to carry your investment property.  A good rule of thumb is to have 6-12 months worth of expenses (eg. mortgage payment, property taxes, utilities etc.) in a seperate account.  This will come in handy when you meet "the tenant from hell" or the property is vacant for a few months.  There is no fun in loosing your investment property to a power of sale and ruining your credit score in the process.  So always good to be prepared for the unexpected.

 

Disclaimer: The opinions expressed here represent my own and while every effort is made to make it as accurate as possible, please use your own discretion before taking any decisions.  You can contact me at info@schuren.ca


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Schuren Sriskandarajah Sales Representative

HomeLife/Future Realty Inc. Brokerage

Independently owned and operated

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