Purchasing a vacation home or other real estate investment properties is one of the most effective ways to grow your portfolio. The key is learning the best time to invest and the best real estate to invest in.
As any investor knows, the markets are fickle and prone to wild swings. Although this can benefit you greatly in some situations, it also has the potential of wreaking havoc on your personal financial picture. Here are four factors to consider when determining the best time to invest in real estate.
Identifying a Good Investment
Identifying what is and is not a good investment is a key component in determining the best time to buy. Although there are consistent trends across the nation’s market as a whole, there are definite pockets which thrive more than others at specific times. Identifying which markets are the healthiest will ensure that your real estate investment dollars go the furthest. Factors to look at include the local economy, the health of the public school system, the future job prospects, and more.
Downturns in the Market
Although a downturn in the market is generally negative for sellers, it can be a positive scenario for real estate investors looking to capitalize on low housing prices, as pointed out by Success Path. Many real estate firms often get started with a market downturn because of the great opportunity available to those willing to take a risk during these conditions. The key is learning to time the ups and downs of a market cycle so that it benefits you the most as a potential buyer.
Unemployment Levels and Income
The area in which you wish to invest should be examined for its local unemployment rates and average income levels. Regions that have increasing housing prices that are outperforming unemployment rates and income levels can eventually implode. Savvy real estate investors look at both of these factors to ensure that the housing market is not overvalued before they take the plunge.
Months of Supply
This term is used to describe the amount of housing inventory available for purchase. A healthy and balanced real estate market will exhibit roughly a six-month supply of houses. This means that if no other homes entered the market for sale, it would take six months to deplete the inventory.
By carefully examining all of these factors, you can ascertain when and where you should invest your valuable real estate dollars. Keep close track of this information to ensure that your investment grows in value in the years to come.