Max Maxwell (pictured above): If the banks are still loaning and you qualify, leveraging real estate is always a great thing. Therefore if you’re taking a great equity position in a property and you can get good cash flow, then absolutely I would take a loan. Do not over extend yourself with the price of the property and take a bad equity position because a bad equity is never good.
Chris Jefferson (pictured above): Affordable rental products are very much needed in the marketplace currently, now is a good time to find the right financing products that are available to provide that type of housing in the marketplace. Both private and institutional lenders are looking for places to place capital for solid and consistent returns. Rental housing, especially affordable, provides that opportunity.
Nasar El-Arabi (pictured above): At this very time there’s a lot of uncertainty however, there are still people with cash on the side that need a place to park it. In times like these rental property can be a GREAT investment. I understand that some municipalities’ courts’ still might not be open to evictions and hearings may take weeks or months. Now, I do strongly agree that you should have reserves for each rental property you have (ideally $5,000) because when dealing with rental property it’s not if something goes wrong it’s when something goes wrong. Also, I’m not one of those people who thinks you should wait for the perfect time. There is never a perfect time to invest. Now, you should invest smartly by buying at a discount, tracking the “path of progress” in a city or finding a value-add property (property that needs work & forces equity).
The number one concern I have if I buy a property now is: what if the value drops. This is a reality however when you buy at a discount. With a 10% – 20 % drop you could still sell. Also similar to stocks you don’t take a loss until you sell at a loss. In the meantime, you will still be getting rental income which is also a return on your investment. You should always buy with returns in mind. If things appreciate that’s an ADDED bonus. So, let’s say today you bought a property for $100,000 but it rents for $1,200 dollars a month. You hold the property for 7 years and when you sell it on year 7, let’s say the property is now worth $140,000. Now, that all sounds great but let’s also keep in mind you will pay long term capital gains for holding the property for longer than a year and a day. Then you will have received depreciation which could be used to shelter some income for taxes and keep in mind you had a tenant paying you over the past 7 years. So all this time the property was working hard keeping up with appreciation while you were doing other things. Unfortunately, most salaries do not keep up with inflation.
Another reasonable fear is: what if my tenant doesn’t pay me? Now me personally, I am a full-time real estate investor and once I buy my properties I hand them over to property management. Your success as a landlord will depend on property management but remember not all property managers are created the same. Whatever asset class you buy in, make sure the property management application fees & experience is within your asset class. You can find a good property manager by networking with other investors or driving around the neighborhood you invest in to see other for rent signs. Then request an interview with a property manager that has been in business for at least 5 years, accepts online payments (this is 2020), how much they pay landlords, whether or not you pay when the tenants don’t pay, etc.
Real estate will always be a sound investment no matter what the market is doing, but before you invest please educate yourself. There are multiple books on real estate investing and loads of free information on the internet. Make sure you do your research on each person you follow to make sure they actually do this business. You also have guys like Max Maxwell, Chris Jefferson and myself who have a lot of videos and free content for those of you just getting started.
Real estate is a long term play not a get rich quick scheme so prepare for the journey.