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Motley Fool Issues Rare “All In” Buy Alert
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Investing in real estate has some significant perks. It can provide passive income, serve as a hedge against inflation, and help you to diversify your portfolio.
But if you’ve been watching the housing market for the past few years and haven’t invested yet, you may fear you’ve missed the boat. Property prices have skyrocketed. And while mortgage rates hit record lows during the course of the pandemic, rates are now up considerably.
With concerns about a housing bubble and interest rates expected to keep rising, you may fear that it’s too late to get started. The reality, however, is that there are three great reasons you shouldn’t shy away from real estate just because you believe the optimum time to invest has passed.
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Real estate is actually a really broad category of investments. It doesn’t just refer to buying residential single-family or multifamily homes. If you’re reluctant to buy these types of properties because you feel like the market has peaked, you could explore many other options, such as buying real estate investment trusts (REITs) focusing on industrial real estate or purchasing virtual land in the metaverse.
Rather than sitting on the sidelines, take the time to look into the opportunities that still exist right now. This way, you can immediately diversify your portfolio beyond the stock market. Since there’s been a lot of volatility in stock prices recently and the threat of a potential recession could cause even more havoc, you could end up very glad that you own some of these other assets.
Although there are certainly some indicators suggesting that it’s not an optimum time to borrow money to buy residential properties, the reality is that no one can predict what’s going to happen with 100% accuracy. After all, when the country entered lockdown and unemployment surged at the start of the pandemic, few people would have anticipated that home prices would skyrocket over the next two years.
If you’re waiting for the perfect time to start investing in real estate, you could miss out on lots of opportunities in the long run — and you may never actually end up getting your money into this asset class because the ideal moment may never come.
Ideally, if you’re interested in gaining exposure to real estate, you’ll want to purchase assets that you’re going to hold for the long term. This is the best strategy for most types of real estate investing, except for more high-risk strategies such as flipping houses. And in fact, across asset classes, long-term investing is usually the optimum approach.
If you’re hoping to hold your investments for a long time, it may not matter much if you don’t buy at rock bottom. Over decades, you should still see your investment pay off.
For all of these reasons, you may want to consider moving forward with adding real estate to your portfolio after researching all of your options and identifying an approach that works for you.
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