2020 has been an interesting year to say the least. Between the Covid-19 pandemic and the US presidential election, we’ve all had a pretty wild ride. One thing I’m sure everyone can agree on is that the future seems a bit more cloudy than it did a year ago. One question that has recently been on the minds of many of the investors I talk to is a basic one I’ve heard many times before
“Should I invest right now?”
And I get it. Times are uncertain. We’re not sure where the pandemic is heading, we’re not sure what exactly is going to happen with the new president elect. Lots to think about right?
When it comes to investing, especially in real estate, I’ve found that there are always reasons NOT to invest right now and those reasons aren’t hard to find, especially if you’re looking for them. With the way the world has become there is always a crisis going on and there is always danger around every corner. One thing I’ve learned in my time as a real estate investor is that the truly successful people in this business never stop investing no matter what’s going on in the world around them. Now I’m not saying that every investment is going to work out great and some investments are better suited to different parts of the market cycle, but continuing to invest is important.
If you’re anything like me, you’ve probably thought to yourself at some point “Man, if only I’d bought back in ______ I would have made so much money by now! Property was so cheap back in ______! You can’t find those kinds of deals these days!”
I had these exact same thoughts when I started investing. In fact, I kicked myself for not starting sooner. I thought I was getting in too late.
It was around this point I connected with a good friend who has been active in Bay Area real estate since the 1970’s. He started purchasing small apartment buildings throughout the Bay Area while working his W2 job and amassed a portfolio of several hundred units between 1970 and 1985. Today he’s a multi multi millionaire thanks to his investments and was able to retire early at the age of 45.
At first I thought to myself “Gee, if only I’d been lucky enough to buy apartments in San Jose in the 1970’s. Property was cheap! I could have bought hundreds of apartments while cruising in a Mustang listening to Led Zeppelin!” Sounds great right?
The true story wasn’t quite so rosy.
We look back on the 1970’s and 1980’s now with rose tinted glasses. While there were some great concerts and fun times, there was also a lot of crisis and uncertainty. From 1970-1985 we saw Watergate, the worst of Vietnam, wage stagnation, rising unemployment, rampant inflation, the oil crisis, globalization and a loss of manufacturing jobs, the steel crisis, two recessions, two stock market crashes, soaring interest rates, a ramp up in the Cold War, foreign debts, homeless vets, aids, crack, and Bernie Goetz.
Seems like an uncertain time to invest right? I would think so too, but that’s exactly when my friend had started investing. Through all of these crises he continued investing in real estate. While those properties were purchased cheap relative to today’s value, at the time they were priced at the market rate. He paid a fair price at the time and has since reaped the rewards of compounding returns. He wasn’t making better investments than anyone else investing at the time, but he was investing, and that simple decision to invest, in spite of everything going on in the world around him, was the best decision he could have made.
In contrast I know a lot of folks who chose not to invest at that time despite having the ability to. There were a myriad of reasons not to and they all had different justifications at the time for their decision, some of which are very legitimate reasons. Today they all share two things.
1) They are not as financially free as they could be had they invested.
2) They all regret not having invested when they could have.
Now I’m not advocating jumping into any old investment as soon as possible. You should always do your research and identify opportunities that align with your goals and risk tolerance and only invest in deals you feel comfortable with.
As always, If you have any questions feel free to reach out to us here at IronGall Investments. We would be happy to schedule a call to learn more about your needs and how we can help.
Until next time!