You’ve probably heard that real estate is a good investment, but is that always the case? With rising home values in many parts of the country and a mortgage industry that has tightened its reins, can you still get great deals that put cash in your pocket each month? Let’s take a look at how these factor into real estate as an investment in today’s market.
Whenever you need real estate advice always seek out professionals like Anderson Advisors. They can answer any questions you have, and get you on track for success.
A Strong Housing Market
It’s definitely easier to find good deals when the housing market is on the decline and there’s more supply than demand. When home values are at their highest they’ve been in years and are still on the rise it makes it more difficult to find a home with built-in equity.
While it is still possible to find foreclosures and pre-foreclosures, as well as homes that need some work before being able to be lived in, it will likely take more time and savvy than it did before. You may have to work a little harder but it’s definitely worth it if you find a diamond in the rough.
Not As Easy To Get Mortgages
With rising interest rates and a mortgage industry still feeling the after-effects of the mortgage crisis not everyone will get approved for a second mortgage to buy an investment property. The old adage to “use other people’s money” is not as easy to put into practice as it was before.
More Renters Than Ever
The good news is that there are more renters than ever, so if you do find a viable property you shouldn’t have too much trouble renting it out. You can also charge a premium for the rent because there’s a shortage of great places to rent these days. Be sure to check your local area and see what price range rentals are going for before you purchase an investment property.
Rising Home Values
Home values have been on the rise and should continue to rise for the near future, but at some point the market may correct itself and prices could stabilize or decline a bit. Instead of banking on a continuous rise of value, you should focus on having your renters pay off your investment properties for you.
Your rental fees should cover your mortgage payment, property taxes, and the expense of maintaining the house. This means each month you’ll be building equity in the house as well as potentially having positive cash flow.
Treat It Like A Business
As long as you treat your real estate investments as a business they should pay good dividends. When you compare it to other investments like the stock market or mutual funds you should be able to get a good return for your money.
Unlike other investments, the more you learn about how the industry and local markets work the more control you have in whether your investment turns a profit or not.
Overall, real estate is still a good investment even in this market but you’ll want to do your homework and be confident that you’re making the right decision before buying your first investment property.