ScaredyCatGuide to Real Estate: Nothing Has to Happen
There was a statement than an investor friend of mine said to me several years ago. I hadn't thought of it in a while, but while on a Mastermind call we were discussing the whole bigger picture and how it creates worry over what will happen and leads to inaction or indecision.
That is when this statement popped in my head....
Nothing Has to Happen!
In regard to the real estate there are so many reasons to predict that the market will pullback or that we are in a bubble.
Interest rates creeping up of late, inflation imminent and on and on.
That's great, but guess what? Nothing Has to Happen..
A lesson on the 10 Year Treasury
The moment I embraced the nothing has to happen mantra was an experience with the rate on the 10 year treasury bond.
What you are looking at above is a chart of the 10 year yield (interest rate). Notice anything?
Yup, it has been trending down since the 1980s. Furthermore since 2018 droves of people (including myself) have been preaching how inflation is coming. The gov't can't just print dollars and keep interest rates low forever without consequence.
Guess what? The 10 year is still lower and in a long-term downtrend. Now this isn't to say we have ticks up and down in the near-term, but when rates were in the 2s a few years ago they had to go up! The continued going down and went sub 1 until the recent tick up.
How do I function in a market like this?
Our biggest worry is really our biggest worry. What we worry about is exactly what stops us from moving forward. Often times that worry never comes to fruition. So for all those people in 2018 that were waiting for a pullback in the housing market from a spike in rates, well they are still waiting.
But wait, rates had to go up! All the signs were there....coughs Nothing Has to Happen.
Rental Real Estate to the Rescue
This is why I love rental properties so much. As long as I buy right and have a cash flow positive property then all the worries of what the market will do are moot.
Interest rates go up, oh well, I'm locked in already. Market collapses from a rise in interest rates, oh well I'm holding long-term anyway and collecting cash flow the whole time.
All we can do is be prudent with that current market and data that is in front of us and move forward. Be sure to run your numbers through the property calculator and buy right!
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