Warren Buffett ,Berkshire Hathaway CEO, wrote in his 1986 letter to shareholders.
“What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
THE GREATEST INVESTOR OF ALL TIME said this in freaking 1986!
Part of me feels like I should just stop here because I do not think I can explain it any better than that. But I will try.
I think everyone would agree the world is fearful right now, rightfully so. There is a lot of uncertainty about what the future is going to look like and that scares people. There are over 35 million people on unemployment with 3 million more people filing for unemployment each week. If you let it, the fear will consume you.
The best investors do not let fear or emotion dictate their decisions. They focus on numbers, reason, and logic.
Easier said than done right?
Trust me I get it. This is not anyones natural response in times of crisis but you have to train yourself to be this way.
The fact is that successful investor are successful for a reason. I know some people out there will say I’m full of it but its true. Successful investors have a skill set that allows them to be great all the time and the key to that is being able to make calm, rational, logical decisions when the rest of world is losing their minds. “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
So now is time to be greedy because everyone else is fearful and here are the 7 reasons why:
- In times of trouble (2008, 2001, 1991, 1981) the get rich quick investors and fad investment companies (AirBnB) run, like rats from a house on fire. So now is your time as investor to get into the market for the long-term. The lesson here is that “get rich quick schemes” never work. Real Estate is about the long game. Doing your research & due diligence to make a good buy accumulate equity and cash flow. NO FLIPPING, NEVER FLIPPING.
- Prices have not gone down but they are stagnant. That is not going to last long. Inventory is extremely low, buyer demand is back to pre-pandemic levels, mortgage rates are projected to drop even further, and the only thing hold back a price explosion is a lack of showings. Once cities and states start to open back open there is going to be nothing stopping this market. Now is the time to buy.
- Despite the fact that prices overall have actually gone up 1% there are a lot of sellers out there whose houses are sitting on the market and they are fearful. There is no doubt that seller is blaming their misfortune on the pandemic even though it is far more likely that they over priced their house, or hired a bad agent but in either case it is an opportunity for you to get a deal.
- Where else are you going to invest? Just because you should be greedy doesn’t mean you have to be stupid. Residential real estate is one of if not the most stable markets we have in our current economy. The tech sector continues to thrive but other than that where else can you invest right now with a reasonable level of confidence? My personal belief is that the commercial retail market will rebound big time over the next couple months because people will be desperate to go outside but I have no evidence of that it’s just a gut feeling. Right now, the numbers point to the big tech companies and residential real estate.
- Because “investing in real estate” for you could simply mean buying your first home. That’s the great thing about real estate, it doesn’t have to be an investment property for you to make a fortune. The capital gains exemption actually makes it easier for people to make money on their personal residence. For example, a client of mine bought a house 3 years ago as a family. They made some nice fixes, cleaned the place up, and made it a home but nothing expensive or outrageous. They are going to make more than $100,000 and get their initial down payment back of $50,000. ALL OF THAT MONEY IS TAX FREE.
- Despite all of the bad news and everything that is happening someday we will return to normal and the markets will go up. I know it is hard to believe but it’s true. Do you want to be the person that took advantage of the opportunity or the person who sat on the sidelines?
- BWSS – BECAUSE WARREN SAID SO