Here's an interesting perspective from Robert Kiyosaki on how to invest in real estate given the current state of the market. Here are some points I agree with:
If Safeway [a grocery store chain] had a sale -- 25% off everything in the store -- the supermarket would be swamped. Yet, when the stock market or real estate market has big discounts (often called a crash or a burst bubble), that same shopper runs away from an asset sale. Instead, they wait until prices are high and other fools are bidding them up further to finally buy.
My point is that this current period is a tough time to buy or sell. Real estate is high, interest rates are still relatively low, the stock market is rising, the U.S. dollar is low, gold is high, oil and gas are high, and there's a lot of money looking for a home.
So the lesson is: Now, more than ever, it's important to focus on value, not price. When prices are low, finding value is easy. When prices are high, value is a lot harder to find -- which means you need to be smarter, more cautious, and resist your knee-jerk reactions.
I'm not a huge investor in real estate simply because it takes too long to identify and manage good property and it's not very liquid. However, if I wanted to get into the market when (if) the crash happens, I could easily. The main reason: I have no debt. One of the advantages of being in this situation is that it gives you a lot of flexibility and allows you to buy (at a big, big discount) when everyone else is selling. It's one of the reasons I recommend a debt-free lifestyle.
Comments