Investing in Florida and Ohio. Is it still a good time?

[Bao Nguyen]

I live in CA, looking for rental properties in Florida and Ohio.  How do i know if it is still a good time to enter the market in those states.  Any idea?

[Jeff Copeland]

Are you flipping or buy and hold?

No one can see into the future to time the housing market. So focus on the fundamentals and forget about timing. 

The real estate market in Florida has been red hot for the past 4 years or so, with low inventory and stiff competition. But I've still done around 15 investor acquisitions in the first quarter of this year, and I've acquired several rentals myself in the past year. Market timing has nothing to do with any of that.

Granted, flipping carries more risk (with respect to market timing), but if your flip can't absorb a slight market downturn and still be profitable when you sell in 2-3 months, then you missed something in your analysis. 

There's much less market timing risk with buy and hold properties. The cap rate and performance of a well-managed rental property should hardly be impacted at all by a downturn in resale prices (at least in the short term) - one has very little to do with the other. 

Market rents don't correlate precisely, or follow the same timing, as resale prices. So if your property is performing at a 7-cap today, and the market takes a 10% dip in resale prices three months from now, your rental property will still be performing at a 7-cap in 6 months (after all, the same tenants and leases are in place).

Real estate market cycles are long and slow and complicated, and they generally trend upwards in the long run. Trying to jump in and jump out at just the right time is a strategy based on luck. Luck fails sometimes.