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How Important Is Timing When Buying Rental Property?

Owning and managing a rental property gives you the opportunity to collect regular income from paying tenants. You’ll be responsible for continuing to pay for your mortgage, property taxes, insurance, and maintenance, but you can usually collect more rental income than you spend in ongoing expenses.

Hypothetically, this can be a very profitable investment – and a passive one if you enlist the help of a property management firm.

That said, much of your success in the real estate investment game depends on your ability to time the market – at least, according to some sources. But is that really true? And if so, just how impde ortant is your market timing?

Fluctuations in the Real Estate Market

You don’t have to be a veteran real estate investor to understand that the real estate market goes through frequent and sometimes unpredictable fluctuations. Housing prices fluctuate in response to hundreds of different variables, including mortgage interest rates, consumer demand, the rate of new home construction, and neighborhood variables like school quality and crime rates. From one day to the next, prices could spike or plummet, meaning savvy investors have hypothetical opportunities to maximize their investment dollars.

In a perfect world, an investor would be able to swoop in and buy houses at their lowest possible price, then turn around and sell them when the market rebounds and hits a new peak. But this is much easier said than done, and the average real estate investor can’t begin to consistently time the market this way.

Why Timing Isn’t Everything

There are several different reasons why timing the real estate market isn’t everything.

Tips for Better Market Timing

With all that said, there are some tips you can follow to practice better market timing.

As we’ve seen, timing the market isn’t that crucial when buying a rental property. It’s an important factor you’ll have to consider, and your timing can significantly affect your eventual return, but as long as you pay attention to other important investment fundamentals, it shouldn’t have the potential to make or break your strategy.

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