Should you be buying real estate as an investment? We will look at five reasons to do just that. In today’s economic climate, it is wise to diversify, and real estate is a good vehicle for this.
1. Real Estate is on clearance! Foreclosures are like a giant nationwide clearance sale. Properties are cheaper than last year and even less expensive than building a home right now. A lower initial investment translates to higher returns on your cash flowing property.
2. Built-in Higher Equity. Buying a distressed property verses the non-distressed homes in a neighborhood can generate excellent equity in the right home. A good realtor can provide the non-distressed property values for your targeted property, so once you purchase and do a little rehab, you will realize this gain. Also, a neighborhood can increase value without prices rising, simply by having the number of distressed homes decrease.
3. Negotiations are in your favor. Being a buyer’s market, this factor is crucial when offering a price for a property. DOM (days on the market) is still extremely high and sellers are very motivated (in some instances the mortgage holder is the seller), so you will be in a position of power when you put in an initial offer.
4. Demand. Demand for rental property is high, due to all the displaced, former home owners who have now become renters. Although an unfortunate aspect of this business, it does offer the real estate investor an enlarged pool of potential renters. Many of these folks are still employed and can make payments. Again it’s important to have a large group of renters to choose from when making this decision.
5. Loans are still cheap. Interest rates are still very low; however don’t count on this trend to continue. This can save you hundreds of dollars.
So, what does all this translate in to? It’s an excellent time to take the plunge (of course after the proper due diligence). All these factors culminate into one fact: Cash flows from rental properties are very high. The return on investment is at the best level in a very long time, simply stating the chances of success with your first rental property and beyond are much higher than in the recent past, and you will be on your way to building a successful portfolio.
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This information is intended to be used as a general guide. It is not intended to constitute legal advice and is not a substitute for the advice of an attorney. While every effort has been taken to present the information accurately, this document may not be infallible. No warranty is made that these materials are current, complete, accurate, or suitable for any particular purpose. You should seek advice from your attorney before proceeding with any real estate transaction.
Source(s):
1. NoteCom
