{"id":10042,"date":"2023-11-22T17:49:47","date_gmt":"2023-11-22T17:49:47","guid":{"rendered":"https:\/\/imsfund.com\/?p=10042"},"modified":"2023-11-22T17:49:47","modified_gmt":"2023-11-22T17:49:47","slug":"the-best-way-to-earn-a-243-return-is-by-not-timing-the-market","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2023\/11\/22\/the-best-way-to-earn-a-243-return-is-by-not-timing-the-market\/","title":{"rendered":"The Best Way to Earn a 243% Return is By Not Timing the Market"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\">\n<button x-on:click=\"open = !open\" class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<p class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/p>\n<p><\/button><\/p>\n<\/section>\n<p><span data-preserver-spaces=\"true\">If you\u2019ve spent any time researching investing in real estate (<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-vs-stocks\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">or stocks<\/span><\/a><span data-preserver-spaces=\"true\">), you have probably heard people throw around the phrase: \u201cTime in the market is better than timing the market.\u201d<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The old saying originated from Ken Fisher, a billionaire investment analyst and financial advisor, and while Ken was actually referring to the stock market with this now-famous quote, the same concept is very much applicable to real estate investing as well.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Many investors are tuned into cycles enough to where they find success with timing the market, but spending more time in the market is a simpler, more sustainable approach for the average investor.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Why Try to Time the Market?<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">The primary draw of attempting to time the market lies in the potential of maximizing the profits and\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rental-property-cash-flow-analysis\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cash flow<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0on your deals. By purchasing a property at a low point in the market cycle and selling at a high point, investors will capitalize on significant returns compared to if they were to buy in the middle of a market cycle.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">In addition to the upside in profits, a lot of investors are able to mitigate risk when they buy their real estate deals during market downturns. If you can successfully time the market and buy deals close to market lows, you will protect your portfolio from substantial losses.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Risks of Trying to Time the Market<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">For any investor who thinks they have the ability to time the market, it can come with great risk. None of us have a crystal ball, so this strategy is impossible to execute consistently.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The real estate market is influenced heavily by interest rates, job markets, and other conditions unique to local economies. Most of these factors are outside of an investor\u2019s control and are very challenging to forecast.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">To time the market successfully, you need an unemotional approach and a little bit of luck. Anybody who attempts to time the market should not expect consistent results.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Hypothetical Scenarios<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">To fully understand the impacts of buying at different points in a market cycle, let\u2019s mock up a couple of scenarios. We\u2019ll use the Las Vegas market for this example, as it saw some of the most drastic price swings over the last couple of decades.<\/span><\/p>\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Scenario 1: Timing the market perfectly (buying in 2012, selling in 2022)<\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">This example represents an absolute best-case scenario, where you buy at the absolute bottom in one of the hardest-hit markets and sell at the most recent peak.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/lasvegassun.com\/news\/2014\/may\/25\/home-prices-through-years\/#:~:text=The%20median%20sales%20price%20of,of%20%24315%2C000%20in%20June%202006.\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">median sales price<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0of a previously owned single-family home in Las Vegas was $118,000 in January 2012. Meanwhile, the median sale price of a previously owned single-family home in Las Vegas was\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/city\/10201\/NV\/Las-Vegas\/housing-market\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">$405,000 in August 2022<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Had you perfectly timed the bottom and bought a home in January 2012, and then perfectly timed the top and sold the home in August 2022, you would have realized a 243% return on your investment over approximately 10.5 years.<\/span><strong><span data-preserver-spaces=\"true\">\u00a0<\/span><\/strong><\/p>\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Scenario 2: Timing the market horribly (buying in 2006, selling in 2012)<\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">Let\u2019s take a look at somebody\u2019s failed attempt at timing the market. They bought a home at peak pricing, assuming prices would continue to go up, and then sold the home at the bottom.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/lasvegassun.com\/news\/2014\/may\/25\/home-prices-through-years\/#:~:text=The%20median%20sales%20price%20of,of%20%24315%2C000%20in%20June%202006.\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">median sale price<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0of a previously owned single-family home in Las Vegas was $315,000 in June 2006. Meanwhile, the median sale price of a previously owned single-family home in Las Vegas was $118,000 in January 2012.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Had you perfectly timed the top and bought a home in spring 2006, then perfectly timed the bottom and sold a home in January 2012, you would have experienced a loss of 62% on your investment over approximately six years.<\/span><\/p>\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Scenario 3: Time in the market<\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">In our final scenario, let\u2019s consider somebody who bought 20 years ago and who has simply held on during the waves of the market.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/money.cnn.com\/pf\/features\/lists\/q3housing04\/\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">median sale price<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0of a previously owned single-family home in Las Vegas was $184,300 in Q3 2003. The\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/city\/10201\/NV\/Las-Vegas\/housing-market\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">median sale price<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0of a previously owned single-family home in Las Vegas was $410,000 in Q3 2023.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Had you bought a home 20 years ago and ignored the several drastic market cycles that followed, you would have realized a 122% return on your investment over 20 years.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Time Horizon<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Time horizon is a huge factor here, as the general direction of real estate has always been up.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Looking back all the way to the year 1960, the median home price in America was only\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.google.com\/search?client=safari&amp;rls=en&amp;q=median+home+price+in+america+in+1960&amp;ie=UTF-8&amp;oe=UTF-8\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">$11,900<\/span><\/a><span data-preserver-spaces=\"true\">. Today\u2019s home prices, according to the Case-Shiller Index, are about $311,000. So, buying a home in 1960 and holding on to it through 2023 would have generated a gain of over 2,500%!<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">For the most sophisticated investors,\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/when-is-it-truly-the-best-time-to-get-into-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">timing the market<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0absolutely can supercharge your returns. But for real estate investors as a whole, each investor needs to carefully consider their financial goals, risk tolerance, and investment horizon to come up with a strategy that makes the most sense for them.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The most successful real estate investors should focus on buying real estate deals at below market value, regardless of market conditions. This way, if they mistakenly buy a property close to a market peak, they will have some\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-home-equity\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">equity<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0left in the deal as they weather a downturn.<\/span><\/p>\n<div id=\"visibility-group-block_64dd561cede13\" class=\"visibility-group  hidden\">\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n<div class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 lg:w-1\/2 \">\n<main class=\"py-4\"><\/p>\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find an Agent in Minutes<\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Match with an investor-friendly agent who can help you find, analyze, and close your next deal.<\/p>\n<p><\/main>\n<\/div>\n<div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n<img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/bpimg.biggerpockets.com\/https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Agent-Finder-Block-2.png\" alt=\"find an investment-friendly real estate agent\" title=\"The Best Way to Earn a 243% Return is By Not Timing the Market 2\"\/>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\">\n<div class=\"wp-block-group__inner-container\">\n<div class=\"wp-block-group__inner-container\">\n<div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n<div class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 w-full \">\n<main class=\"py-4\"><\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n<p><\/main>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/the-best-way-to-earn-a-243-percent-return\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article If you\u2019ve spent any time researching investing in real estate (or stocks), you have probably heard people throw around the phrase: \u201cTime in the market is better than timing the market.\u201d The old saying originated from Ken Fisher, a billionaire investment analyst and financial advisor, and while Ken was actually referring to [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":10043,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/11\/real-estate-time-in-market-1024x517.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-10042","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10042","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=10042"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10042\/revisions"}],"predecessor-version":[{"id":10044,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10042\/revisions\/10044"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/10043"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=10042"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=10042"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=10042"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}