It has been said by many that timing is everything. In real estate, it can often seem like sheer
luck that delivers a positive or negative outcome. But, as you see from the definition, timing is
about conscious choices. One of the biggest choices we make in real estate is how fast we
move. Anyone in the business will tell you that moving too fast can lead to major mistakes
whereas moving too slowly can lead you to miss out on great deals.
So how exactly should a real estate investor approach the question of timing? When is the
“sweet spot” with any given deal? Is it time to buy in a down market? Is it time to buy in an up
market? If it were consistent, it would be easy! But every single real estate opportunity is
unique and requires a unique response - especially in terms of timing. We have found that years
of experience has given us a greater ability to find “the sweet spot” between speed and
perfection. Thankfully, we also know that in any market, up or down, there are always
phenomenal investments if you work hard enough to find them. You make your money when
you buy, and when you buy for the right price and structure the mortgage and upgrade funds in
a way that allows for staying power, investments in all markets will work well.
The next layer of questions is what the best strategy is for the investment once it is purchased?
Is it to hold it for 3 years, or for 10, or for 30? Is the goal to go in with as little money as possible
and create the highest growth for that money with all cash flow being re-directed to upgrading
the property? Is the goal to create the most stable cash flow? Is the goal to create the highest
cash flow for the owners and forego value increases? For us it depends on the where we are
at in the market cycle and the goals of the investment group. At bottoms we try to deploy the
least amount of cash into properties and use leverage (so we can buy more properties that just
went on sale). At tops, it is a more conservative approach- put less debt on the property and
focus on quality and stability of the property and cash flows to owners.
In a perfect world, we could take months to complete due diligence on a property, and we could
hire every specialist to examine every corner before we invested. And in that same perfect
world, a crystal ball might help us to know NOW is the perfect time to sell. But in the real world,
we have found that the very best guide for our decisions is our decades of experience. The
knowledge we have amassed over hundreds of investments in multifamily housing in the Pacific
Northwest has taught us how best to balance the practical and the optimal, when to move fast and when to exercise patience.
There’s simply no substitute for experience!
