Should One Invest Now or Wait for Better Times?
I talk to many business people regularly. What is their perspective? What are they doing in today’s times?
Currently, in my central Nebraska area, there are many good things going on.
- Agriculture is having a record boom. Commodity prices are extremely high and land values are skyrocketing, creating huge net worth for farm owners.
- Our unemployment rate in central Nebraska is around 3%. Many jobs are going begging.
- Rents and home values are going up, so real estate equities are sound.
- Local banks are very profitable and are looking for loans.
So why is business not improving rapidly?
Businesses are extremely skittish. A regional home improvement center owner says that if local people would just look locally, his company sales should be exploding. However, he claims that national issues such as the presidential election and debt ceiling extensions make customers cautious and afraid to do anything. He said that the last time we had a Washington congressional debt extension fight he lost two months of sales. People are very anxious, with little prospect for attitude change until after the election. Customers and businesses need some sense of longer term certainty to be optimistic.
It is also difficult for investors to go against the generally cautious view. However, sensible real estate investing makes sense in any environment. What are good reasons to act now?
- The uncertainty means there are limited active buyers looking, which creates opportunity.
- Cap rates seem to have increased to entice the cash sitting on the sidelines.
- Banks are searching for loan customers, so applying for a loan might be a shorter process.
- Interest rates are at record lows, so locking in these rates for 7-15 years is a possibility; some types of loans like SBA can also be fixed even longer.
- Sellers may have needs that can’t wait, so it is a great time to make offers and find the transactions you want.
- If inflation is in, our future property values will escalate along with other asset values.
It shouldn’t take much encouragement to activate your investment search now! Uncertainty can be your friend.