Many people are now wondering if it is the right time to invest in our community. With very low property values, historically low interest rates and the volatility of the stock market, many savvy investors are starting to look in their own backyards for investments. But is investing in Manteca, Lathrop, Ripon or any community in our valley worth it?
Abraham Lincoln once said, "Property is the fruit of labor...property is desirable...is a positive good in the world. That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built."
Lincoln’s wise words not only help build individual wealth, but also improve the overall economy around you. If you have more income, odds are you will go to Bass Pro and buy more lures or take the family out for a nice Italian dinner at De Vega Brothers. You can be an economic stimulus to a community that desperately needs it. So why should you invest in our community?
Here are 4 reasons why I believe investing here is worth your while:
The price of housing is at relative all time lows.
As we all know, our housing market has taken a huge hit over the past few years. But what some are hanging their heads about and screaming doom and gloom, others are seeing as the deal of the century! For the first time in a very long time our housing market has dropped below the price of construction. There are plenty of houses for sale in our area below even 80 dollars per square foot. The cost to construct those same homes can cost any where from 90 to 110 dollars per square foot, depending on finishes and such. The deals are even better in the high end housing market where you can see a house in Ripon that sold in 2007 for $800,000 now available for $400,000.
We have also seen stabilization in our housing prices and even price gains. San Joaquin County in 2009 saw a median sale price of $168,000, and 2010 YTD we have seen our median sale price rise to $178,000, that’s almost a 6 percent gain in just six months. All of these are great signs of improvement in our housing market.
Interest Rates are below 5 percent.
That statement should stand out and grab you! Interest rates have dropped over 2 percent in the last 3 years and almost 4 percent in the last 10 years. Jim Camara with Scenic Oak Funding said, “Mortgage rates are at a 30 year low with the 30 year fixed rate loan for owner occupied properties around 4.500% and investment properties are around 4.990%. Loan products are available for first time homebuyers, move up buyers and real estate investors.”
Strong rental market
The demand for properties to rent is high, thanks in part to the slumping housing market. Many distressed homeowners who have had to short sale, foreclose or lose their homes to bankruptcy are pouring into our market looking for housing. In my opinion, they are some of the best tenants to have. Most people who have ever owned a home have a great sense of the “pride of ownership”. They understand what it means to turn a house into a home and care for a property. They also are stuck in the rental market for at least three years after a short sale and up to 5-7 years or more for a foreclosure or bankruptcy with a house involved.
The rental market is currently proving larger yields than the stock market.
Everyone who has stocks or a 401k knows what I am talking about. We all see our quarterly reports, shake our heads and read the rest of the mail. The Dow Jones Industrial Average has seen a decline from January 11, 2010 to July 8, 2010 of 542.92 points or 5.11 percent. So if you would have invested $200,000 in the index six months ago, you would have seen a loss of over $10,000!
Now take that $200,000 and invest it into our local housing market and with our low interest rates and cheap housing, coupled with relatively high rents, you could have purchased three homes providing you positive cash flow of $1,500 a month after paying the mortgages and property taxes. Now that’s a good reason to invest in Manteca and not just Wall Street!
What does it take to get started investing in our community?
Like any investment it takes money to make money. But if you have 20-25 percent down, at least 6 months worth of rent in reserves and a credit score of 720 or more you might qualify today. Or you could always purchase with cash and have all the rental income be positive.
It also takes a great Realtor who understands the community, housing market and your needs and desires to help you accomplish your goals. I would also recommend consulting a CPA and having a good real estate attorney.
And as Donald Trump said, “Well, real estate is always good, as far as I'm concerned.”
For more information on real estate and investing in our community please visit my site http://centralvalleyrealestatesearch.com
Comments(0)