What's A Realistic Time Horizon For Strong Real Estate Returns‪?‬ The SFR Show

How to do make money grow quickly, yet safely? Is real estate a good strategy if you need liquidity in 2-3 years? In this video, we discuss time horizons for real estate returns and what you could do if you need liquid cash within the next couple years but still want your money to work for you.
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Transcript
 
Michael:
Hey, everybody, welcome to another episode of the remote real estate investor. I'm Michael Albaum and today I'm joined by my co hosts,
 
Tom:
Tom Schneider,
 
Emil:
and Emil Shour.
 
Michael:
And today's weekend wisdom, we're going to be talking about some of the different time horizons to be thinking about with regard to your investment. So should you if you need the money sooner? Should you be investing in real estate? Do you see it as a long term growth vehicle? Or is it something that you're going to need in the more immediate future? So let's get into it. So, guys, we were chatting before the show, Pierre brought up an amazing question he's dealing with right now. And with his family that he's investing with, they are looking at investing money into real estate. And someone brought up the question of, well, the kids are going to college in a couple of years, should we be investing this money in real estate? What is the different time horizons that we should be expecting for real estate investments?
 
So Emil, I'm going to kick it to you first, if you are planning on using a chunk of change in three to four years, you know, you're going to need it for something, whether it's a new purchase a car, kids going to college kids, you go into school, what have you? Should you be investing in real estate? What are your thoughts?
 
Emil:
Personally, I look at real estate only as long term investing. So if I was looking at something three years down the line, I would I would not take that money and put in real estate personally. Everything I buy, I'm thinking about in terms of at least 10 plus years. So
 
Michael:
And what are you worried about in that three to four year time horizon? Why wouldn't you put it in real estate? The last couple years, the markets been on fire?
 
Emil:
Yeah.Yes, yes, it has. But it's always hard to predict, will that happen? Just with real estate, in general, my thought is, on a long enough time horizon, it is much harder to mess it up. I'm, obviously I want to mitigate risk and do as good of a job and like, you know, you walk into a properties thinking like, Oh, my spreadsheet math is tells me I'm gonna make this much per year and blah, blah, blah. In reality, things happen, things break, you know, you have down years. And so to know that it's only going to be two to three years, it's very possible that that could be a period where either a the market goes down, we have some significant capital expenditure where cash flow for the year is negative, so you're losing some value there. So for me, I just I think two to three years, especially this is this is more of like a side hustle, quote, unquote, right? I don't I don't do real estate investing full time where I feel like I'm a pro and, and all that.
 
So just for me, personally, where I'm at in my career, I don't, I wouldn't take short term money and put it in real estate and be like, Alright, I'm gonna get on two to three years. Plus, when you sell a property, you're typically paying five to 6%. So like, even let's say you have five to 6% appreciation, after you sell and pay your commissions and closing costs, all those things like a lot of that could just be vaporized. So I like holding for long term.
 
Michael:
I mean, I've got a follow up question for you on the timeline. So let's kick it out to a 10 year time horizon. Let's turn the clock back to somebody investing in 1999. They have a 10 year time horizon. Now 08 hits, they're planning on selling in 10 years, and they just get decimated?  Doesn't the same same risk factors apply 10 years down the road that we could be in a down market by the time you're looking to sell