2020 turned the real estate market as we know it on its head. While the fundamental rules of the business stayed the same, there’s no denying that the housing market reacted unpredictably. That’s not surprising in light of the uncharted territory of a global pandemic.

What’s the best way to buy an investment property? Just as there are many investment strategies, various financing options are at your disposal, each with drawbacks and benefits. While we certainly have avenues we recommend more than others, every investor should be well-informed about every option.

Mortgage rates are the highest they’ve been since the Great Recession. Current 30-year fixed rates hover in the 6 to 7% range. Historically speaking, that’s nowhere near the highest they’ve been (that title belongs to the average in October of 1981 at a sickening 18.82%. Yikes!), but current rates are coming off all-time lows in 2020 and 2021. 

With home prices higher than ever, it is no surprise that homebuyers are waiting patiently for mortgage rates to come down and ease sticker shock. After all, the higher the asking price, the more the percentage matters.

But is it wise to wait for rates to drop?

We think not. As real estate investors, you risk more in the wait than in taking the chance in the market as it is. Here’s why:

U.S. housing inventory is trending in the right direction. 

We saw a 12.9% year-over-year increase in new property listings in February. Although total inventory remains flat, we’re finally not seeing a decline in overall inventory for the first time in nine months.

As you’re likely aware, tight inventory is mainly responsible for the stubbornness of the housing market. Even when active demand seemingly froze market activity, prices haven’t budged. Inventory kept rising interest rates from easing home prices. It’s also made the supply and demand balance unsustainable.

Ideally, this increase in new home listings points to a turning point on the horizon. But there are a few problems – and reasons investors shouldn’t sit back and “wait out” low inventory.

You’ve undoubtedly poured over the details when looking for a real estate investment market. You’ve analyzed rental rates, median income, sales prices, local economics, and more…but have you asked about the weather?

Location matters, not just because of the economics, housing affordability, or rental demand but because of the climate. 

Both run-of-the-mill weather risks and natural disasters could jeopardize your investment property. If anything, it could be costing you a pretty penny in maintenance and insurance costs! Here’s what you need to consider about the climate as you choose an investment market:

The term “turnkey” isn’t regulated in this industry. The original concept is clear enough – turnkey properties mean you can “turn the key” and step right into a new or fully renovated property ready to earn passive income. But not everything advertising “turnkey” is doing the same thing. Because the definitions vary and the word is used purely for marketing, investors need to know what they want from a “turnkey” experience.

What do turnkey investing companies ideally do, and what are the signs that something might not really be turnkey? Keep reading to find out.

So you’re investing in real estate…but are you investing in yourself? Here’s the harsh truth – none of us are naturally adept at building an ideal financial future on our own. For some, financial success comes from parents who instill lessons of self-discipline and the value of a dollar. For others, it comes from personal research, lots of reading, or even degrees and certifications.

No one expects a passive real estate investor to be an absolute expert. You didn’t sign up for a passive gig just for it to turn into a full-time job! 

Sometimes, the best deals you do are the ones you said “no” to.

“How is that possible?” you might ask. We live in a time when the real estate market is competitive and contentious. That’s true for the average buyer, and it’s true for investors. Even now, we sense FOMO – the fear of missing out – plaguing the real estate industry. Potential homebuyers are afraid they won’t win their bid. Investors are worried they’ll miss out on once-in-a-lifetime deals. They think they’re doing something wrong if they’re not participating in the hottest new investment market.

But sometimes, staying out of it is better than jumping in.

Though the factors that sway the rise and fall of the real estate market can be varied and complex, there’s no denying that housing inventory is among the most impactful. As one of the most significant talking points among investors and real estate professionals, we must all understand how inventory impacts what we do – and the industry.

You’ve decided this year will be your year. It’s finally time to jump in and buy your first rental property. Passive income is calling! But wanting to invest in real estate and actually doing it are two different animals. Sometimes, the practical steps to get it done are mysterious, especially for new and inexperienced investors. 

Never fear – we’re here to give you a step-by-step action plan.