The Timing Factor
More than people would like to admit, there’s an element of luck involved in real estate.
The variables include:
•Whether your buying and/or selling coincides with housing market peaks or troughs (if you’re doing both, it matters much less).
•What prevailing interest rates are — and what they’re doing just before you lock your loan.
•Whether a block or neighborhood that’s on the upswing continues that direction — or, if it’s down-and-out, begins a turnaround.
Call those “macro” factors.
“House-Specific” Risk
Equally important are what I call “micro,” or house-specific variables.
Like, which home in your price range and preferred neighborhood(s) just came on the market . . and which one just sold.
Later, once you’ve closed and moved in, there’s literally house-specific luck.
The good kind?
The hardwood floors under the tattered old Living Room carpet are in pristine condition.
The bad kind: the old plumbing in the walls of the to-be-remodeled Master Bath is a mess.
Mix of Both
Unavoidably, everyone is buffeted by a mix of these factors.
While some people seem to have more than their fair share of housing good luck and others the reverse, it’s more typical to experience a dose of both.
So, one client earlier this year encountered a bit of “turbulence” remodeling a dated, 1940’s Minikahda Vista Colonial (unexpectedly high plumbing and electrical bills).
On the other hand . . . they lucked out with their hardwood floors (covered by aforesaid tattered carpeting), and really lucked out locking their 30-year mortgage almost exactly at the bottom (around 3.3%(!), I believe).
P.S.: And yes, “due diligence” can reduce remodeling surprises.
But the nature of the beast is there are lots of unknowable’s, until walls are opened up and the project(s) are underway.
For an explanation why Realtors jumping into real estate investing is a contrarian indicator, see this post.
