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“The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”

— John Templeton

Is it possible to time the real estate market?

They say you can’t time the stock market.

It’s supposed to be impossible.

But I disagree, and so do researchers.

According to this study on improving stock market predictions, experts found that news and social media can be great tools to foresee changes in the market.1

We won’t be talking about those methods today, but I do want to share a secret with you.

I believe it’s possible to time the market.

My opinion is different from most people’s view on this.

Warren Buffett himself talks about Mr. Market.

He says Mr. Market exists in many different assets, including real estate.

One day, he’ll be elated to work with you and charge crazy prices.

The next day, he’ll be depressed and sell for whatever anyone is buying.

Sounds super unreliable, right?

That’s because it is!

This mindset exists in assets like real estate as well.

I think right now is the best time to get into real estate.

In this blog, I’ll share how I figured that out and how you can take advantage.

Let’s jump into it!

1. Is It Possible to Time the Market?

Can you actually time the market?

Yes and no.

If you say you’re going to wait six months to make a move without doing the research…

That’s probably not the best approach.

An example of people actually timing the market happened in 2007.

They saw the valuations getting high, recognized the overheated market, and got out.

Because they sold around the peak, they got back into the space around 2009-2011.

Sounds like a miracle, right?

How did they know to sell right before the Great Recession?

In my experience, when you see things are elevated, that is a sign to pay attention.

Sometimes it’s hard to tell if things are worth more or less than their actual historical valuation.

We’re encountering that right now.

Houses and apartments are currently difficult to value.

The cost of debt has gone up, causing a fair amount of challenges.

People who have bridge debt especially have experienced some losses.

But despite these setbacks, it’s important to have a long-term perspective when you invest.

It’s not always about timing the market, but instead the time in the market.

When you look at valuations, you can tell if you’re getting in at an overheated moment.

If you bought in 2008 and managed to hold the property, it could have taken 10 years or more to recover to its 2008 valuation.

In contrast, if somebody offered an opportunity in another asset class, we could look into that as a growth opportunity

We do something called relative valuations.

They are proven to provide valuable information and significant returns for investors, according to this article from the Journal of Financial Markets.2

One of our aims at Bronson Equity is to not be a one-trick pony.

We don’t only look at apartment investing.

Instead, we branch out and invest in things like ATM machines, oil and gas, and car washes.

We also look at doing private equity with venture capital companies.

Each of those investments has an ideal time to invest.

Sometimes, the best time to invest in something like precious metals is not the best time to invest in apartments or vice versa.

If you’re able to look at relative valuations, there can be great opportunities there for you.

2. The Best Time to Buy

You need to be greedy when others are fearful.

Now, I’m not necessarily a proponent of greed or fear.

But it’s easy to see when people are overexcited.

A recent example can be seen in crypto.  People often get super elated when it’s been climbing.

We should be cautious when that happens.

In the opposite vein, we should also pay attention when people are afraid.

We should look for undervalued properties when people don’t want to buy.

In multifamily, we’re seeing valuation declines of 20% to 40% in some areas.

People see those numbers and don’t want to invest in multifamily.

To me, that decline means it’s actually the best time to invest.

Benjamin Graham, who was Warren Buffett’s mentor, talks about this in his book, Security Analysis.

In the book, he talks about how in the short run, the stock market is a voting machine.

It rewards whatever is popular.

In the long run, the stock market is a weighing machine.

It weighs the relative value of what is important and what is generating income.

We see this in other assets such as real estate.

Where I live in LA, people are paying to have almost no cash flow or negative cash flow to buy real estate.

Even when you put 50% down for an investment, your cash flow will still be negative.

It does not make sense to be an owner in areas like that, unless you have an angle.

There will be a time where it will make more sense.

We’re also seeing cap rates rising.

Things are looking more attractive.

In 2008, there were some incredible opportunities happening.

For example, when the Florida and Vegas housing markets crashed, some people went all in.

They made 4x or 5x returns.

The valuations since 2008 have gone up incredibly fast.

If you used debt, your profit could have been exponential.

We’re talking 10x returns in 5 or 10 years.

You should be aware of those lofty valuations that increased very quickly.

Pay attention when people are fearful.

When your Uber driver starts giving you investing tips, that may be a sign of an investment’s peak.

When people are afraid, start looking around.

You might be surprised at what you find.

3. Buy When Others Are Not

The goal here is to buy when others are not.

With multifamily, we’ve seen some distress and challenges, particularly with bridge debt.

People are avoiding investments because of this.

Another example of people overlooking investments is in Detroit.

Detroit has seen some rough times in recent memory.

As the automotive industry moved more overseas, the factories in and around Detroit began closing up shop.

There are other well-documented social factors that contributed to Detroit’s fall from grace, which you can read about here.3

This economic downturn decimated the area.

And then around 2008 to 2012, people started giving away parts of the city.

If you paid the right taxes, you could take over a full city block.

People took them up on their offer and Detroit saw a huge revitalization.

Many people look back on examples like these, particularly when it comes to apartment investing, and wish they had bought more.

A lot of what happened then is happening now.

Valuations are down.

Interest rates are higher, which reduces your buying price.

Your buying price of a property is fixed when you buy.

That’s pretty obvious and you can’t change it.

You can always adjust your interest rate later.

If interest rates come down, which they’ve forecasted repeatedly, that should make the cost of money cheaper.

We’re already seeing this.

When that happens, the price of multifamily apartments will go up.

Be aware, look towards the future, and buy when people are scared.

Now I want to hear from you!

What investments are scary right now?

Are you going to take the leap and invest?

Let us know in the comments!

Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.

If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.

Check out my bestselling book on Amazon!

Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.

Bronson Hill

Bronson used to work as a consultant for a medical device company but switched to investing in apartment buildings to make his money work for him. He started with a single rental property that made good money and, after some advice from a family member, moved into bigger real estate projects. Now, he's all about helping others get into this kind of investment to earn money without having to work all the time. When he's not dealing with investments, Bronson loves to travel, write songs, stay active, and help fight modern slavery through his work with Dressember. He believes in working smarter, not harder, and wants to share how that's possible with everyone.

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