Investor Resources

Can you time the market?

When is the right time to buy in this market?

My answer is there is no right or wrong time to buy a real estate asset.

Interest rates are rising and we're in a pretty volatile lending environment, most would say now is not the right time to buy. However, If the asset fits your criteria or has a path to get there in a reasonable timeframe, after you go through your due diligence, your analysis, and your exit strategies, if it still fits in this environment, I would say pull the trigger and move forward.

There's a saying that says date the rate, marry the deal. Interest rates will change, nobody knows when. They're gonna start coming down in a year, two years, five years, I don't know. Historically we're probably at the median of interest rates right now so there is a chance they do not go down at all or for a very long time.

Trying to time the market is dangerous. There are billion-dollar companies and they can't tell you when the top and the bottom of the real estate market cycles are. So you just have to do your best, do your due diligence. do your research, and have your exit strategies lined up.

A lot of syndication groups and a lot of investment firms have to continuously acquire assets, and that has gotten a lot of groups in trouble this past year. They pay their employees, they pay their rent, their utilities, and their software off of acquisition fees, and that has gotten some groups into some hot water, by taking larger fees (which ultimately dilutes the investment). 

In the major metropolitan markets, we've been seeing assets are being turned back to lenders because those groups had to buy and now they're upside down and they're giving properties back. I do think there's gonna be some opportunity taking advantage of those situations in the next 12-18 months or so.

So if you're not forced to acquire assets, take your time, be patient and like I said, match up your criteria and your exit strategies, and then pull the trigger and go after that deal.

If you're waiting for another 2008 crash to happen to jump into the market, that's likely not going to happen. Banks and institutions are more favorably leveraged than they were in 2008. Investor equity is going to get wiped off the table when lenders take back properties, but the lending institutions will be fine.

I think lenders are way better positioned, they're gonna be 65%, 70%, into that deal where they could put it on the market and probably even turn a profit, so there's not gonna be that huge crash. At least, in my opinion. So the smart investors, they're going to take advantage of the market, but it's not going to be pennies on a dollar like it was in 2008 and 2009.

That is the reason we moved from a closed-end fund structure to an evergreen fund (open-ended). If we were to buy in the last 12 months, we were at the top of the market, in a five or seven-year hold we don't know what cap rates are going to be at the exit. 

We pivoted to an evergreen strategy where we can buy assets now. We could buy assets on the way down, and we could buy assets on the way up by using diversification, spreading that risk out, we feel like that's the better long term strategy for building wealth and spreading out risk. We are in a unique situation where we are facing a downturn in the investment real estate market however, we are poised to take advantage of it.

(45) Timing the #Market | Dual City Investments - YouTube