There's been a lot of news recently regarding big corporations and their decision to buy single-family housing units in bulk. Sound familiar?
You bet, it's a lesson learned from individual investors who have been buying single-family homes for generations.
One can argue that 2013 may well be an excellent year for individual real estate investors. That's because the year has started out with an unusual combination of circumstances, which favor small investors.
Tip #1: Consider home values: In general terms they're rising. The National Association of Realtors says that in December existing home prices were 11.5 percent higher than a year earlier. That's good news but it's also news to view with some care because real estate values are highly-localized. Pricing trends can differ even for properties that seem fairly close, a very good reason to speak with an Atlantic & Pacific Real Estate sales professional who can discuss local housing patterns.
Tip #2: Money: During the past few years many investors have bought single-family properties with cash. NAR says that in December 29 percent of all existing home sales were for cash and that most of those sales involved investors.
The cash option is great because there's no question about affordability or lender approval. However, many investors prefer to finance properties because they are then able to leverage their funds.
The good news here is that the marketplace is awash with mortgage money and therefore rates are near historic lows. The government says that typical fixed-rate mortgage was priced at 3.47 percent in December for 30-year financing.
Tip #3: Inventory: Although home prices in most communities have been rising many local markets still contain large pools of distressed properties. Such properties include short sales, properties being auctioned as foreclosures, and properties held by lenders as "real estate owned" or REOs.
Distressed properties are often associated with substantial foreclosure discounts. In some communities the discounts can exceed20 percent or more, according to RealtyTrac.
Condition is a major concern when looking at distressed properties. Some are in move-in condition; others require significant rehabilitation. However, because the inventory of distressed properties is now so substantial investors in many areas can select from a broad array of choices.
Tip #4: Demand: To be successful with real estate there must be buyers and renters. Rising home prices suggest that buyers are seeking properties while on the rental front there is evidence that vacancies continue to decline while rental income is rising.
The catch, as always, is that real estate is a localized commodity. What's true in one location may be very different elsewhere. For current information be sure to speak with an Atlantic & Pacific Real Estate sales professional about investing opportunities in your community.
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