Does this make sense?

If you have a long horizon, I think it's a pretty good time to get into real estate, although it is highly dependent on location and what types of properties you are considering.

I like rental condos in cities that are undergoing substantial re-urbanizations. I believe that there is a major trend (that will continue for years) towards people getting out of the suburbs and back into walkable cities where they can live close to work/shops/restaurants. This also ties into the fact that people are staying single longer and waiting longer to have kids. Most people can't afford down payments due to the economy, and it's hard to get a mortgage, unless you have stellar credit and a substantial amount down upfront.

^^ Agree. I'm looking to buy in the next 1-2 years. Looking for a nice place that will be attractive to young professionals that I can live in for a few years. My only concern is that Chicago will be forced to jack up property taxes sometime over the next few years.

Honestly, it seems that we are being guaranteed cheap interest rates for as long as needed. Whether or not its enough time for the market to stabilize before outside events make the interest rates increase without significantly affecting prices (Increasing interest rates = cap rates go up whether prices decline or rents increase) is another story that should be factored into your decision. A lot of signs are pointing to deflation right now. Just look at International demand for $ and American bonds. They are investing with us because they know their home currencies are devaluing. How long can that last? No idea. China seems too unstable, one day they are deflating, the next day its mega inflation.

However, I know for a fact that a lot of market analysts don't see cap rates going much lower in certain regions. I would tend to agree... we have interest rates in the 3.x's% right now, and I just can't see high demand locations such as NYC reaching NYC isn't safe from prolonged economic turmoil. There is a wall that won't be breached.

I believe we have 2 main options when it comes to this:

1. Markets recover and stabilize, interest rates increase to try and keep up with lower investment demand. Rents keep up with increased cap rate demands, thus increasing property prices. Your money is safe. Not sure what we would need for this to happen.

2. Markets continue to devalue: Rents drop, and so do prices for income producing properties/US assets in general. As rents drop, the perceived relative safety in high demand markets comes into question, especially as investors begin to default on their pre-deflation loans. cap rates increase to make up for the risk factor since the fed can't cut anymore.. Game over for your investment, especially if outside economies deflate as well. Like it would matter. This is when you wish you were in fixed income.

To counter this, I am specifically looking at cash flow rich projects. If you can make your investment back within 2 years, I think you're pretty safe.

Thanks for the ideas guys. There's still a lot of information for me to consider.

Getting into real estate can mean a number of different things. To answer your question, we really need to know what you mean by “getting into real estate.” Do you mean:

1. Buying a house, duplex, or some other form of RE that is accessible to anyone who can make a down payment? --> good time to do this
2. Trying to get a job at a RE company? --> depends on the company and may be difficult regardless due to economy
3. Trying to pool equity to invest in larger RE assets? --> need to have prior experience, equity contacts, and brokerage relationships. People that do this don’t decide to do so overnight.

The answer to each is different and these are by no means the only forms of “getting into real estate.”