Just like any other financial market, real estate continually cycles through its highs and lows. There can be great debate on whether the market as a whole has bottomed out, but there is a growing consensus that many markets already have. Either way, now is a great time to start investing in real estate.
Here are five fundamental reasons to start investing today:
- Price: The sales price in almost every market has dropped substantially. When you combine the effects of short sales, foreclosures and bank owned properties with an already saturated market, this makes for a real steal for those that have a good game plan.
- Inventory: Inventory is at an all time high in most markets, which only contributes to the falling prices, but also helps with selection. Investors should not only look at the sales price and appraised value, but they should look very carefully at the rental market in which they are selecting a home. Sometimes passing on a little equity to capitalize on a strong rental market can have both short term and long term benefits, also known as cash flow.
- Interest Rates: Current economy conditions have pushed interest rates down to historical lows. Investors that are considering long term holds will benefit the most as interest rates and inflation increase over the next few years; so will the rents.
- Seller Expectations: Most sellers including banks are now working harder than ever to move their properties. This not only translates into lower sales prices, but more concessions. Sellers are now willing to pay closing costs, help buy down the rate, or assist in paying for repairs.
- Renters: As more and more individuals foreclose on their homes, the rental market will continue to increase. There are a number of individuals that bought the wrong home at the wrong time for the wrong amount and now they are upside down on their homes. Many of these homeowners have and will continue to simply foreclose. These new renters that have great income can and will be able to afford larger rental amounts. li>
Keep in mind that every market has a bottom; it is up to you to do the due diligence that leads to a successful real estate transaction.