You never know what the winds of change will bring. Stock market woes one day, huge rallies the next… Billion dollar injections… Real estate sales up 65% from the previous year for Edmonton…
How does one manage all the risk and uncertainy in markets like this? If you believe some of the people on this blog a good time to buy is NEVER. If I’d listened to these people I’d have nothing. In the late 80’s when interest rates where 16% it wasn’t a good time to buy. In the 90’s we were in a recession and it wasn’t a good time to buy. According to many of these people it wasn’t a good time to buy when the markets were going up…Rolling my eyes now. So it’s not good to buy when everyone is buying, and it’s not good to buy when everyone is selling and you have more choice. Truth is many of these people want you to live in the same fearful state they do.
Anyway, if you are coming on this blog and trying to decide when to buy then maybe now isn’t the right time for you, but it’s a start as you’ll hear both sides of the argument.
Risk is manageable.
Uncertainty is primarily psychological (fear, panic, euphoria). You can control your risk factors and tolerance. For example stocks vs mutal funds, long term revenue properties, flips or a home.
You can limit risk by:
1. Doing Your Research – Knowledge can be very powerful as it lets you see opportunities where others see only uncertainty.
2. Working with professionals – Experts of different specialties can be huge assests to you in mitigating your risk. Seldom are you the professor that you think you are. The problem with real estate is that you may think you’ve been doing everything correctly all along only to find out later, and at significant expense, that you didn’t do things correctly and that there was a lot of little stuff you missed. Many times that little stuff can be become extremely costly in real estate. (REALTOR’S, lawyers, appraisers, mortgage brokers, financial planners and so on.)
3. Diversifying - Don’t put your eggs all in one basket. Do I need to say more here?
Dealing with uncertainty is sometimes a matter of nature vs nurture. If your tolerance for bad news is low, then the next couple of years are going to be really tough on you and you’re unlikely to see the forest through the trees. If you see opportunities in uncertain times, and you manage your risks wisely, then you can come out ahead in the long run.
Don’t get choked by fear spread by people who are using that fear to profit from you.
