Here is an update on the rental property search that had been going on for the past 3 weeks. The condo that I was looking at ended up selling for much higher than the listing price. I put in a bid that was about $25,000 over listing (which I thought was generous, but fair), and was still “substantially outbid”. This was my first attempt, so I didn’t want to fall in love with the house and make the mistake of buying too high. Still, the fact that my offer wasn’t even in the running for the top 2 (backup winner was also selected), makes me ponder on just how HOT the real estate market is at this time.
Even with the stock market in a state of perpetual flux (or so it seems), there seems to be no slowing down of investors hungry for property. I’ve been to about four open-houses already, and each one seems to be more packed than the previous one. There simply are too many investors and not enough inventory to balance things out. Perhaps demand will cool off later in the year, which would make for a better entry point with less bidding wars. Due to these unforeseen events (January-March were slow months for real estate, relatively speaking), I may have to reconsider my plan of attack on how to deploy capital. On one hand, I am holding large reserves in cash, anticipating the need for funds to put towards an immediate downpayment. On the other hand, if the stock market has another significant pullback, and I choose to hold off on real estate investing until say October timeframe, I will be very tempted to commit this money into the stock market.
There is one more additional open house I will be touring tomorrow morning. Things are starting to get interesting! One piece of advice that I’ve learned and would like to share with readers is:
Patience is key. Investing in real estate (an actual physical piece of REAL property), is not straight-forward. There is only so much within your control, and so many others variables at play that you CANNOT control. Don’t make the mistake of over-bidding just to win! I’m competitive by nature, but have to remind myself not to treat this investment endeavor like I would a game of pickup basketball. Winning just for the sake of winning is foolish if you have to over-spend.
Know your target amount beforehand, and don’t deviate from this. Don’t buy more than you can afford! Like stocks, the market will eventually present another buying opportunity. However, unlike stocks, selling back a piece of property is not so easy. In fact, it’s a painful process. So, take your time and be patient. It may take a month, two months, next Fall, or even next year before you find the right house. Just stick to your plan, and you’ll be ready to catch the next train when it arrives.