With another pummeling rate hike documented in the books, is it premature to wish the 2022 real estate market away? With economic prophecies acknowledging an upcoming recession, investors in every industry are reigning in the expectations while preparing for a budget buffet. However, the quintessential question remains: “When” is the best time to buy? The old adage has always advised to buy low and sell high, but how low will real estate prices drop and are these discounts illusions exposed to reality by record level interest rates? The wisdom lies in the balance, of course. And a surefire way to protect any investment is to ensure that the numbers make sense. If you are investing in a passive income generating property, residential or commercial, the rents and rates of return should make sense on the cash flow front, separate from the value of the property. There was a time, during the housing boom, when it was actually recommended by industry experts to hold faith in value over price and return. If a house, despite its lack of cash flow, continued to rise in price point alongside the expansion of the real estate market, it was a hedged bet to concede a little on the cash flow front, for overall gain. However, the game has adjusted, and because interest rates are rising above price point percentages, it would be prudent to make the math work in the present, in order to prepare for a turnaround in the future. Combined, an investment today, if acquired with both factors in mind, can double its impact on your portfolio in the future. Also, there is less likelihood you will have to make up for “overpaying” on a property, or acquiring one through the rigors of competition. Today’s investment can be a diamond in the rough with a little patience and a keen eye for.
