I know, I know – you’ve been hearing for years that it’s a great time to buy real estate. When the bubble burst a few years ago, and people were losing money on their houses, it made investing in real estate, understandably, a scary proposition.
But thanks to the same recession that caused the real estate mess, there are loads of opportunities for those with the financial resources and means to buy real estate. Here are seven reasons why it’s currently a buyer’s market in 2011.
1. Mortgage Interest Rates Are Low Again
Several years back when the mortgage rates hit an all-time low, people went crazy buying homes and investment properties. Some of the same people ended up getting greedy and borrowed against their newfound equity, which eventually contributed to the downturn of the real estate market. Don’t repeat these mistakes.
2. The High Volume of Recent Foreclosures
Many former homeowners have been displaced due to foreclosure, so there are a lot more renters in the market, making it optimal for investors to buy rental properties without the burden of the mortgage payment.
3. People Prefer Houses to Apartments
Right or wrong, there is often a stigma associated with finding an apartment for rent. If someone has owned a home, they might see it as a step backwards to move into an apartment. This creates a great opportunity for you as a real estate investor. Also, those who have owned homes prior generally will make better tenants because they tend to treat rental homes as they are used to treating their own home.
4. Tenants Often Prefer Private Landlords
I believe most people would prefer to rent from a good private landlord as opposed to a property management company. For some, it is the security of knowing that only your landlord has the key to your home. Others might feel that there is an opportunity to eventually purchase the home through a lease with option to buy, or lease-purchase contract.
If you have a short-term investment strategy and can buy the property at a low enough price, a lease purchase or lease with option arrangement with your tenant might make sense. It also increases the likelihood that the tenant will keep the place in good shape since they are going to buy it.
5. Real Estate Prices Are at a Low
In many markets, real estate is pretty cheap. Some of the best places to buy are Arizona, Florida, California, Michigan, and Nevada. Considering that housing is generally your biggest expense, you might want to consider relocating to an area where you can get a nice property for a reasonable price. When I moved to Arizona from Maryland, my housing payment was cut by 66%, although we did also downsize our home a little.
6. The Short Sale Market
The short sale market in many areas has also created some great opportunities for getting a non-foreclosure home at a great price. In my opinion, a short sale is a better option than buying a foreclosure, because you never know what the history of the house is or what has happened while it has been sitting vacant.
7. Real Estate is a Great Long-Term Investment
Regardless of the recent crisis, real estate is still a good, long-term investment. If you look back 30 years, real estate is still valued much higher than it was. And if you have tenants paying your mortgage, it makes the investment that much more profitable.
If you do decide to invest, meet with a trusted local real estate agent who can help you navigate the ever changing landscape of the real estate market. They often know when properties are about to go on the market and may have a lead on a short sale property that can be a great buy.
Happy house hunting! Will you be investing in real estate in the near future? Why or why not?