Is Now the Right Time to Invest in Real Estate?

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We’ll be the first to advocate prudent business decisions. Before you ever put down your own personal money towards a potentially lucrative business opportunity, you need to labor over every detail, each possible scenario, and feel certain with 100% confidence that it’s the right move to make.

That said, some entrepreneurs go through this entire grappling process, tossing around potential what-ifs and ignoring the sure-fire writing on the wall simply due to fear of failure.

If that sounds like you, it might be time to break from the confines of your mind, trust your gut, and take the plunge into the real estate industry. Today we’ll go over some questions you should pose to yourself in order to gauge the temperature of your financial situation and determine whether or not it might actually be the right time to start investing in real estate. At the end of this read, if all signs point to “Yes”, than stop doubting yourself and make the jump!

Can you cover the costs?

As eager as you may be to get some skin in the real estate game, it ultimately will all boil down to one qualifying condition: you’re able to responsibly afford the initial investment. Now, that doesn’t mean you need to be sitting on a pile of cash in your savings account to make a transaction a possibility, but if you plan to take out a loan, it’s imperative that you can pay back your debt on time each month.

Some first-time investors may have trouble getting approved for traditional mortgages, but there are plenty of other local options you can choose from for financing. For example, if you’re planning a fix-and-flip project in Central California and don’t plan on living in the home you intend to renovate, you can contact hard money lenders in Sacramento who might be able to overlook your low income or lack of credit history in favor of higher interest backed by the property equity.

Remember, though, there are many costs involved with a fix-and-flip business outside of the actual purchase price of the property. Be mindful of the renovation costs, labor required, and holding expenses you might incur in order to make a fully informed decision.

Do you have the time?

It doesn’t matter whether you hire a realtor or go at it alone, or whether you get bids from contractors for the renovation work or plan on making DIY repairs. At the end of the day, any way you go about it, real estate transaction and home renovations are extremely time consuming endeavors that will require your full attention—especially if you’re a first-time investor getting your feet wet in the complex world of real estate.

Between property inspections and escrow procedures, it can feel like the actual closing of the deal has dragged on for centuries. That doesn’t even account for the renovation timeline, construction requirements, permits, licenses, and various bureaucratic red tape. Unless you’re planning on moving into the property, you’ll need to hire a realtor or list as FSBO (for sale by owner) and take your best shot at negotiating a lease or sale.

Planning on earning a rental income from tenants? Be prepared to go through the extensive screening process and either make yourself available as an attentive landlord or hire a property manager to do the work for you. Bottom line: this is not some 5-12 month passive income scheme; this is a commitment that you’ll be locked into for quite a while, and if you don’t have the time to give it the attention it deserves, now might now be the right time to invest.

Do you have the tenacity?

If you have the time and the income, then it all boils down to whether or not you have the tenacity to pull off a successful real estate venture. You’re not scared off by the many challenges in front of you and you look forward to researching the real estate market down to the tiniest detail to ensure you’re choosing the most profitable neighborhood, housing structure, and so forth.

You have no qualms about asking your contractor why they’re behind schedule or needing to respond to urgent tenant requests. You have the grit and you have the resources, so go for it!