Are you one of those people still on the platform watching the real estate train go by. Or have you already hopped on and are involved in the real estate market?

Many people ask me about when I think the best time is to buy real estate and when I think the best time would be to sell real estate. The simple answer is “buy when you can afford to buy and sell only if you have a good reason to sell”. Real estate in general has had a spectacular ride over the past 20 years and in my opinion should play a role, big or small, in your alternative investment portfolio.

The more complicated answer would be of course “it depends”. It depends on the purpose of your purchase. If you’re buying a house to live in then any speculation about market trends is of minor significance. You’ll be occupying the house for a long time and would not have to abide by anyones timetable but you own. However if you are fixing and flipping a property then you may only have a narrow window of opportunity to sell that house and therefore the market temperament may hurt you. If you are buying an investment property and intend to hold it, you are also less sensitive to market trends since you rent it out and wait it out if need be. The ripple effects of a correction or God forbid, a crash will affect you more or less depending on the type of your investment.

Question. When would you sell?
Answer.  Why would you sell?

If you need the money to invest elsewhere in a place where you get a higher return on your money, sure that’s a good reason to sell.
If you cannot stand the headache of being a landlord and dealing with leaks and quarreling neighbors, then hire a property manager or yes, cash out. Otherwise why sell? Your tenants are paying your mortgage and the equity in your property is increasing year over year.

If you want to be more cautious and in control you may want to use my poker game rules. Before I start a poker night I decide how much my maximum budget would be for that night and will leave once it’s spent. But I will also decide in advance at what amount of winning I cash out and call it a night. This neutralizes the emotional aspect which is hard to ignore in the present. Similarly investors grow emotionally attached to their properties and may fail to make cold economic decisions. For example, a condo purchased for $350,000 five years ago that has doubled in value and reached $700,000 today may have peaked. A better upside for your money may now be available elsewhere.

Every person has a unique investment profile which can be matched with investment options. If you’re not sure what your investment options are, consult with a professional like a realtor, a mortgage broker, an accountant or an exempt market dealer. Once you figure that out hopefully, we’ll see you on the train, happy hopping.

Broker of Record, Schichter Realty Inc.
zvi@schichterrealty.ca
647-294-2285