What Is The Right Time to Buy a Home?
I wish I could take credit for what I am about to say, but credit belongs to a very smart savvy Realtor who explained this to me some years ago when we were working together on a transaction.
When is the best time to buy a home?
When mortgage rates are down?
When the economy is booming?
When you win the lottery?
When you have a lot of money?
When you get married?
When the right deal shows up?
When real estate prices come down?
In a recession?
When you qualify? or can afford it?
When you have the money for the down payment?
Previously to talking to that savvy Realtor, I had been at this game of Real Estate for a while and I didn't have a definite answer. It seemed to me that a combination of the above was the solution to this question.
Think about it. The following factors need to align for you:
Your Credit Score has to be within the Range you need.
You need to have some money for downpayment and closing costs or a way to get it.
Your income needs to be sufficient to afford the mortgage payment plus property taxes, insurance and a little extra.
Your job or activity has to be somewhat stable.
You must have decided to purchase.
You need to be actively searching
And, there is a property on the Market for Sale that you like which is within your financial possibilities at that precise moment in time!
All these factors do not come simultaneously for everyone. You might have some of them, but not the others.
For example, many years ago, all these variables aligned for me and I found this amazing deal in an artistic building, in a central good location.
The developer had purchased an older 1940s Art Deco building, completely refurbished it, but just when they were doing the final touches to the property, they run out of money. The bank took over the project, and was selling these units for in between $150,000 to $250,000 for the Penthouse Units.
This was around 2010, coming out of the 2008 recession. My wife and I were living in a swanky property by the ocean in Marina del Rey. The mortgage payment on these Art Deco Units would have been lower than the rent we were paying (extremely rare to find this in Los Angeles) and the cash requirement to buy one of these units was about $5K.
We had pretty much everything on the list above but, we could not decide! And within 30 days, the opportunity went away!
This is where the advice of that savvy Realtor comes in. She said to me:
"Alejandro, the best time to buy a home is when you are READY!"
She continued:
"It is not about the economy, interest rates, timing the market, what the government does or does not do, what your friends or family tell you or advise you, it is not even what the real estate market is doing, because even in the 1980s, when rates were in the 18% range, people were still buying homes, all these factors only align a few times in a person's lifetime, therefore when you hit one of these times and you have decided, you are then READY and you should act."
Wow! I thought to myself, I would have never come to this conclusion!
This advice applies to a home that you are going to use to live on.
In my opinion, some of the confusion comes from all these "How to get Rich" using Real Estate books and courses, where they introduce Commercial Real Estate Concepts into Residential Real Estate!
Commercial Real Estate has a completely different focus, intent, motivation and methods of establishing what makes sense from an investment point of view.
Residential Real Estate is where you live, where you save through mortgage payments (covered in an earlier article) and where the value of your property grows over time.
Commercial Real Estate is the technology and methodology of how to identify a property that makes money and produces cash flow from day one! This is not always applicable to Residential Real Estate.
If you are ready, or believe you could be or are close but need a little help, I'll help you align all these factors!
Recently I worked with a couple for two years(!) until all the factors aligned for them and they bought the home they were seeking!
Thank you for reading this, and I hope these experiences are of value to you!
