Home News ‘Should we wait to see how the market plays out?’ I live in Arizona, and want to purchase a rental home in Texas. Is this a good time?

‘Should we wait to see how the market plays out?’ I live in Arizona, and want to purchase a rental home in Texas. Is this a good time?

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Market Watch,

Is it a good time to buy an investor to rent, or should we wait for it?

We live in Arizona, but the house I buy is in El Paso, Texas. It involves borrowing a mortgage at a 3.5% interest rate. The house will be a newly built single-family home with 4 bedrooms and 3 full baths.

I will also be a landlord with the help of my Texas family. I don’t know if that’s right now. Should I wait to see how the market develops in another year or so?

From the bottom of my heart

Look at El Paso

Big movement‘Is a MarketWatch column that looks inside and outside real estate, from searching for a new home to applying for a mortgage.

Do you have questions about buying or selling a home? Want to know where the next move should be? Email Jacob Passy [email protected]..

Dear eye,

There are many reasons why people should hesitate to test their bodies of water as real estate investors — and trying to time the market is just one of them.

“No one can predict where the housing market and prices will go from here,” said Tess Zigo, LPL Financial’s adviser. Look at the last two years. At the start of COVID-19, sales activities suddenly stopped, and it seemed that the housing market had bottomed out. Just a few months later, Americans flocked to buy a home, pushing prices to record highs across the country.

There’s a reason to think the market is at the top, but it’s important to note that most economists don’t expect prices to fall as they did after the housing bubble formed in the early 2000s. Instead, most people expect that rising mortgage rates will simply slow the pace of rising home prices.

Buying a home as an investor is to prepare for the worst scenario. Perhaps you’re talking about buying a home to rent, so you’re planning on staying in this for a long time. Even if the price goes down, it’s okay if you can continue to pay your monthly mortgage. You only run into trouble if you need to offload real estate in the downmarket.

“” Too many people consider real estate a guaranteed investment

— George Galliardi, Founder of Coromandel Wealth Management

George Galliardi, founder of Massachusetts-based financial advisory firm Coromandell Wealth Management, said: “As interest rates rise, there are even more challenges in finding ambitious buyers later.”

The bigger question I think I need to answer, rather than worrying about market timing, is why you want to start investing in real estate in the first place. Except for the past few years, the average long-term growth rate of home prices has been lower than the rate of return on the stock market.

And increasing your money through the stock market is generally a less time-consuming pursuit. You say the family will take care of the house for you, but mixing family and business is a tricky feat. Do these families have free time to devote themselves to the inevitable emergencies? Do they expect a reduction in profits? Are they willing to deal with nightmarish tenants?

And in the future, if your family suddenly loses control of real estate for you, are you ready to travel to El Paso on a regular basis to pick up slack?

Certainly, there are other ways to diversify your portfolio besides buying a rental property. For example, Galliardi proposes to consider buying shares in a listed real estate investment trust.

“Too many people consider real estate to be a guaranteed investment. It’s nothing more than any other investment,” said Galliardi. “It can be a big diversification move on their part, or it can be an incredible time and money sink for them. You need to be prepared for the latter possibility.”

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