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- Timing the market, or trying to buy when market values are low and sell when values are high, is an approach investing experts say to avoid.
- However, a real estate investor who owns 10 properties says that rule should apply to buying rental units and real estate, too.
- In both stock and real estate investing, timing the market never works. In her experience, there's no wrong or right time to invest.
- Policygenius can help you compare homeowner's insurance policies to find the right coverage for you, at the right price »
Like stock market investing, real estate prices are constantly in flux. For many investors, the goal is to buy low and sell high. But that's never a guarantee, and it often doesn't work.
Timing the market, or waiting to buy or sell based on prices, is a method that most investing experts recommend against, especially when it comes to the stock market. And the same is true for real estate, according to an investor who owns 10 properties.
"They are kind of the same in that they have risk," says real estate investor and landlord Becky Nova, who owns 10 rental properties. In her experience, ups and downs in the housing market should matter just about as much as they do in the stock market if you're looking to buy.
Timing the market doesn't work for stocks — or real estate
Experts say it's never a good idea to try to time the market for stock market investing.
"Absolutely no one can predict what the stock market will do next," writes financial planner Eric Roberge. "It's worth repeating: anyone who thinks they can do it is speculating, guessing, or forecasting." For most investors, time in the market should be more important than timing the market.
In real estate investing, the same principle applies.
"You have to understand the ins and outs, and you have to know your exit strategy for every type of investment. If you're buying stocks, you have to know, 'Am I going to try to sell this in a day or a week, a month, a year?' Just as you do with a property," says Nova.
Instead, she says, the rewards of real estate investing should come over the long term, as they would in the stock market.
There's no right time to invest in real estate
With sales of new and existing homes at a record high, and a limited inventory of homes for sale, it's been a seller's market since the start of the coronavirus pandemic. But that didn't stop Nova from purchasing another rental property in October 2020.
"It's one of the best income-producing properties that I was able to buy, and that was in New York in this completely crazy environment," she says. "I don't think that there is a time to buy or a time to sell. It depends on the individual property, the area that it's in, the numbers that [it] can produce, and also what it's worth to that person."
Investing in real estate is quite different from other types of investing, but the fact that market timing doesn't work holds true for this type of investing, too.
"There are always deals that are still out there," Nova says. "You have to find them just like you did pre-COVID."
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