We get it – investing in an uncertain economy is nerve-wracking. You don’t know what to expect. It feels like there’s a genuine possibility of losing everything. While there will be challenges, investors can’t allow fear to stop them from building their wealth.
The real estate market is a point of contention. Are we headed for a crash? Are prices sustainable? Should we even invest when conditions aren’t so favorable? Let us provide some reassurance: investing in real estate is also a good decision.
Here’s why we press on despite the challenges:
3 Reasons We're Still Investing in Real Estate in 2023
#1. Home prices aren't going to crash
Many would-be investors stay on the fence because they fear a housing crash. We get it – the idea is all over the headlines. Based on historical real estate performance and what we’ve seen so far this year, it’s not going to happen.
For one, rising interest rates have had a negligible impact on home prices. According to Zillow’s survey of 400 real estate markets, only 133 saw a price decline in February 2023. It’s been a steady downward trend since the housing correction began last year.
The fact is simple: the state of supply and demand doesn’t allow higher interest rates to tangibly lower property prices. We’re still stuck with just under 3 months’ worth of inventory, half the healthy amount. There aren’t enough properties to go around, which keeps prices up.
Even if price correction continues, it’s likely to cause a slowing of growth, not a reversal. We’re not worried about the real estate market crashing à la 2008.
#2. It's all about perspective
It’s easy to focus on the here and now. The investor, however, must have a broader perspective. The housing market moves in a predictable cycle. These cycles may vary in length but always follow the same pattern. This makes real estate a reasonably reliable, predictable asset to own. Your focus may shift, but it’s never a bad time to invest in real estate.
The investor knows that the market will change, properties will appreciate, and cash flow will increase. You don’t worry about the small setbacks when focused on the long game.
#3. Worthwhile long-term gains
Real estate isn’t and has never been a get-rich-quick investment. Every investor will start slow, short of those who can immediately infuse their portfolio with millions of dollars. However, as you grow that portfolio, you protect against risk and increase cash flow. Properties are worth more over time. Your equity grows.
It takes time to see the true fruits of your labor. Because of this, time is of the essence. The sooner you can start investing, the better. Time passed is wealth lost.
We’re still investing because we can’t afford to wait – and neither can you!
The Caveat to Consider
Of course, all of this is not without a caveat. Real estate investors aren’t guaranteed success on the merits of their asset class alone. Though real estate is time-tested and reliable, not everyone succeeds. Some people will fail and lose money.
How do you make sure that’s not you?
- Due diligence. It boils down to doing your homework. When buying an investment property, you take all the necessary steps to ensure it’s the right one. You have inspections done, neighborhoods assessed, and markets vetted. You ran the numbers and know they work. You left a comfortable margin to work within.
Of course, due diligence isn’t reserved for property acquisitions. It’s the ongoing responsibility of a property owner. It includes reviewing and refining your portfolio, working with the right people, and maximizing property profitability.
- Leverage wisely. Real estate investors benefit from leverage in two ways. One, they utilize landing to acquire properties. As those properties generate income, they pay down the mortgage. This minimizes the cash investors pony up to build wealth. Leverage doesn’t stop there, though. Investors have the opportunity to leverage Some people hesitate to invest because they feel ill-equipped and inadequate to do the job.
Investors, however, can lean on teams of experts instead. A turnkey partner does all the hard work of market research, property acquisition, and management. Not only that, but they operate with scaling and portfolio diversification in mind. This means investors avoid costly mistakes while building wealth in an ideal environment.
Yes, we’re still investing in 2023. We see the infinite merit in doing so – knowing that if done right and responsibly, real estate investors can flourish in any economic circumstances.
We're here to help you plan for your financial goals—today and 20 years from now!