The Fallacy of Market Timing

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A common question I receive from investors is, "Is now a good time to invest?" This is often followed by the lament, "I should have invested when...”

Real estate is a long-term investment. It is a passive income you will not outlive, and neither will your children or their children if you buy the right properties. There are families in Asia and Europe still living off properties purchased by ancestors hundreds of years ago. I call this dynastic wealth. You can improve the lives of your children and their children. What is keeping this from happening is that you have to start.

“What if I wait until…?”

If you plan to hold the property for the rest of your life, how it performs during a month or even a year is irrelevant. Also, waiting for the ”right moment” to buy a property does not work and has little impact on long-term performance. But, waiting does cost you capital growth from appreciation. In the current market in Las Vegas, prices and interest rates are rising so waiting will cost you more.

Common objections to buying today:

• Interest rates are high, I will wait until they come down. - At least in Las Vegas, prices will almost instantly rise when interest rates fall. By the time you can react, you will be too late. Instead, buy a quality property now. Lock in the current price. When interest rates fall, refinance.
• Experts are predicting a crash - "Experts" have been predicting a crash every year since 2013. These experts provide sound bites for clickbait, facts are to be shaped to support clickbait headlines. Currently, there are no indications that a crash will happen in Las Vegas. What matters most is not property prices, but also whether rents keep pace with inflation and income reliability. Our client's income has been very reliable, even during turbulent economic times. For example, during the 2008 financial crash, our clients experienced zero decreases in rent and zero vacancies. Although market values plunged, their rental income remained stable. This is because we target a very specific tenant segment whose jobs are typically mission-critical, and who are almost never laid off even during tough times.

The longer you wait to purchase a property, the more you will lose out on potential equity gains from appreciation. As you will be holding the property for the rest of your life and your children's lives, the timing of your purchase is less important than the quality of the property you buy.