“Don’t wait to buy rental properties, buy rental properties and wait” is an old saying, but it is as true today as it was years ago. In a perfect world, most of us would go back in time to a few years ago to buy cheap properties, but since we can’t travel back in time we will have to settle for investing now or at some point in the future. Even with prices rising in many parts of the country, I feel right now is still a great time to invest in rental properties. Many people think another housing bubble is coming, but trying to time the market is not easy. If you have the means, I don’t think it is smart to wait to buy rental properties for a number of reasons.
I am making over 20 percent cash on cash return on my long-term rentals in today’s market! I show exactly how I do it in my complete guide to purchasing long-term rental properties.
Interest rates are still low enough to create cash flow on rental properties
The biggest reason I would not wait to invest in rental properties are the incredibly low interest rates that are still available. Rates have risen in the last 6 months, but they are still extremely low. Interest rates below 5% are available on most types of loans and those rates makes it easier to cash flow on rental properties. When I invest in long-term rentals, my main goal is cash flow and people have invested in long-term rentals for a very long time with rates much higher than they are now.
Housing prices are still low in many areas
We have seen an increase in housing prices over the last year across most parts of the country, but prices are still lower than they were at the peak of the real estate market in most areas. With lower housing prices, it is much easier to cash flow on a rental property, especially when you can finance with such low rates. If you buy rental properties below market like I do, then it is tough to lose money.
People are looking to rent homes and rental rates are extremely high
Rental rates are also going up or are staying stable in many markets. While banks have made it harder for investors to get loans, they have also made it harder for owner occupied buyers to get loans as well. Since it is becoming harder to get a loan, there are many more renters in the market than there have been.
There have also been a lot of people who lost their homes to foreclosure or sold them as a short sale. The people who lost their home will not be able to buy another home for at least three years in most cases. They have become renters and need a place to live, which investors like myself can offer.
Even those who are able to buy have been scared into renting by the recent market crash. Many people see prices going up and worry that means another bubble is coming. They continue to rent houses until the perfect market conditions appear, which may never happen. In my market in Northern Colorado our vacancy rate is 1.7 percent, which is extremely low and makes it very easy to rent homes.
The sooner you start investing in rental properties the better off you will be
What are you waiting for? The sooner you buy a rental property, the sooner you will start receiving cash flow and paying down your loan. As with almost any investment, the sooner you get started, the better off you will be later on. I wish I would have begun buying properties earlier than I did as I would be in a much better position. As long as you are investing for cash flow, you can survive the down falls in the market. The longer you have cash flowing coming in, the more wealth you will create. Here is a great article on how much money you can make with rental properties. The key is the later years when the cash flow has a chance to multiply and increase returns. Don’t wait to buy rental properties!
Conclusion and update
I first wrote this article in 2013, but three year have passed and the market has changed. Prices are much higher in most parts of the country and hopefully you bought a few properties when houses were more affordable. I am still buying rentals and flips, but it has gotten harder to find great deals.
For more information on how to buy the best rentals which will make the most money, check out my book: Build a Rental Property Empire: The no-nonsense book on finding deals, financing the right way, and managing wisely. The book is 374 pages long, comes in paperback or as an eBook and is an Amazon best seller.