When is the Best Time to Sell a House
Will there be times in the market that are more advantageous than others to sell a house? The absolute best time to sell a house is ANYTIME. IF you bought it the right way, then anytime should be the right time. Consumers and investors usually follow separate and opposite tracks.
What do I mean by that?
I mean when all the consumers are buying up real estate, the investors jump up to sell! When everyone is in this buyer’s market, that’s when you can usually sell for the highest price and that’s when investors will want to trade into different properties. But the opposite is also true.
When all of the consumers think it’s the worst time to invest, creative investors buy up everything like crazy! Warren Buffett – he had his own hedge fund at the time. He was buying 30… 40,000 homes per year into the markets that actually were totally decimated.
So the best time to sell your house really is at the market high before it falls out. That’s when you’re going to cash in on top dollar. But if your strategy requires that, then you may have in fact, the WRONG strategy. Because if the market is ever turning and moving it away that it’s not advantageous for you, you should be able to continue holding that home, cash flowing it, and continuing to make money on it.
This is one of the reasons why one of my many rules in real estate is that I buy below the median. Why?
Because if the market ever turns AGAINST me, I’m going to keep on cash flowing that property and those lower-priced homes that don’t lose value like a million dollar home does!
Warren Buffet uses the principle he calls the Margin of Risk. And really when you talk about best time to sell a house, it’s hard to not cite what Warren Buffet does. This man has become a multi-billionnaire and one of the greatest philanthropist of our day and age, all based on a very simple principle called Buy Low, Sell High.
In his book The Snowball, he says if you want to reduce your risks, you have got to increase your margin of profitability. It’s real simple:
If you buy a house as an investor, buy it with a lot of equity because if you do, whether it’s the wrong or right time to sell, you can sell it profitably!
In the video above, I showed you an example of the house I’ve just recently sold. It was purchased in 2005 and sold in 2015. Yes, I’ve held on to it for a good 10 years! Why? Because it’s a cash cow! How do I know that?
For a moment, take a look at the ROI: We put in $9,000 but look at what we got out? $65,000! That’s a 720% increase.
What’s the difference? Roughly $37,000 that we got to make in cash flow and to down payments, deposits, along the way.
Then when we sold the house, we collected a check for $28,000 that me and my partner got to split after I paid back my partner the $9,000 that he put in. He put the money in, he got paid back. Basically, that’s a profit of $28,000 to split. $37,000 was made along the way, so that’s roughly $65,000, right? So this tiny little house – 4 bedroom, 1 and a half bath, did a good job taking care of me.
Now, divide that over holding the home for 10 years and that is 72% a year on your money. Now, my business partner and I made 72% a year based on whose money? His money! He and I get to split the ROI 36% each.
But let me ask you, if I put no money in, what is my real net ROI? It’s INFINITE! Think about it. I didn’t put anything in, but I got all of that money coming back out to me.
Now you might ask why I did sell it if it’s a cash cow…
Why did I really sell it?
Because the market was right!
But what do you do when the market’s “wrong”?
Just keep making money and keep cash flowing! When you do real estate the right way, it can always be the best time to sell a house or buy and hold; which is why I love short-term buy and hold strategies that allow me to make money along the way.
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