I was always wondering why people buy real estate only when prices are high, but when they want to buy some clothing, they hurry to buy merchandize after season. Why buyers are so afraid to buy during a buyer's market?
To sell the house in buyer's market, seller must offer a bargain price or they will see the effect similar to trying to sell Christmas decor in January.
Now it is time to buy and hold properties, build portfolio. People say: If you do not know what to do, follow the leader.
Real estate investors are looking for properties from distressed sellers in historically high appreciating areas, at a minimum of 30% discount. Those properties are in move in ready condition. They also target properties with some potential or that are in need of major repair. After renovation, they increase the value. Because of the risk involved, they look here for properties with minimum 40% discount. They will cover monthly expenses and wait with resale 3-5 years. The best strategy is to buy the cheapest home in the best location you can afford, or stay close to the best areas.
If you want to play safe, it is best to buy average homes, in best school districts, because in the economic downturn, people with higher income will move down, and in the economic upturn, people with lower income will move up.
Some people, even they bought the property as a long-term investment, want to know the appreciation of their property right after purchase, which is similar to the child who is checking his growth every day. If the property is rented and covers all monthly expenses, don't worry about the appreciation at the moment.
To identify quickly if some property is income producing, or not, use the 1% rule. For example: if the price of the property is $100,000, monthly rent should be not less than $1000. If it is $1200, even better.
Are you ready to invest in real estate now?
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