We live in a world that at the present moment is confused to say the least regarding real estate and its importance to the average person. We all know that real estate is the best investment with the best returns historically but the down turn that the market has taken this last time is making everyone really doubt if that is even true anymore. Prices keep declining and loans to acquire real estate keep getting more restrictive. It is easy to see why the average person isn’t sure if they even wanted to own any real estate any more. The job market is terrible and unemployment is not coming down. People who thought they had what in the past was considered as a safe job that could be thought of as secure don’t feel that way anymore. The truth is the financial environment is in a state of emergency and the only things that will change it is smart decision making and education.
Let’s answer the main question is it still smart to own real estate? Yes definitely yes. What kind of real estate is it good to buy? Multifamily properties. I know everyone wants their dream home and no one wants to go from an apartment that they rent to an apartment that they own. Most people think if I’m going to take on that kind of responsibility then I want a single family home I can call my own.
With prices declining and the interest rates so low combined with FHA down payment requirements of only 3.5% on 1 to 4 units this is the time to start buying multifamily properties. It makes financial since. If you buy now and at the write price you could be setting yourself up for financial independence in the future. Rents are strong. Do to so many people losing their homes places to rent are in high demand. You are dealing with new tenants that yes may have lost a home but still make enough money to pay a decent rent. If you can deal with being a property owner of an apartment that you live in in the future those apartments will generate income and can potentially fund your retirement. The thing is to know how to work your money so that in the future it works for you.
If you can buy a 4 unit building that allows you to pay what you currently pay for rent or even less then you are coming out ahead. In the future when that property appreciates and it will maybe not in 5years maybe not even in 10years but it will appreciate. That gained appreciation with the equity built by you and your tenants paying down the mortgage can be used to start a retirement fund that helps you gain your wealth so that what you’re going to live on at retirement isn’t just based on your savings and if you’re lucky social security and a pension that might not even exist.
If you plan things correctly you could potentially be buying a new property every three years and holding. The idea again is stop thinking of real estate as the emotional property that you own and start thinking about it as the investment that you control. You also must even when buying a single family property actually any kind of property plan ahead and make sure you are well insured just in case of job loss or death. Your children and loved ones shouldn’t be left behind dealing with a web of financial nightmares.
How do you accomplish everything I’m talking about? Easy, work with someone who is not just an agent or broker of real estate. Work with someone who is focused on taking your whole financial picture in to consideration before recommending any type of investment. It doesn’t matter if it is in real estate, stocks, or anything else. The person that you work with should be knowledgeable in all types of financial strategies not just building wealth through real estate. The person should be looking at everything you spend and finding ways to free up more of your money to get you to your end goal in the fastest and most financially sound way as possible. If they themselves aren’t licensed to do anything else but real estate they should have a team of other types of advisers that can come together and advise you as a group about how each financial decision you make effects all the aspects of your life. Don’t get sucked in to just taking one rout remember diversify always diversify.
The price points that we are seeing currently won’t be back once their gone so don’t get left out, stop sitting on the fence and pull the trigger.
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