What if the Price of My Contra Costa Real Estate Investment Drops?
Although Contra Costa County Real Estate Prices historic trend is ever up (even after the last crash) there is always the concern about a price drop. Yes at some point there will be a price drop in real estate. I do not think drops in real estate price drops are coming soon and I think there is a lot of room for price increases.
But what about when the prices drop on Real Estate Investment Properties in Contra Costa County? Well if you are in it for the long term it will not matter, because the price will bounce back.
A lot of the last crash was a result of people having adjustable rate mortgages or Negative Amortization Mortgages with adjustments they could not afford. That crash was so sever it was further complicated by those that did not have a payment adjustment but needed to relocate or lost a job.
Most loans today (and it is what I recommend for buyers) are fixed rate 30 year loans. (I generally do not recommend shorter loans on 1-4 units even if you can afford the higher payment due to the low interest rates.) No matter what the value of the property your payment will stay about the same. In California even the property tax payment has very limited growth (and can go down when the home value drops).
In this area rents have remained fairly stable and even have continued up during the housing price drops. In fact the housing/foreclosure crisis may have even led to rent increases as more renters came onto the market. Although a drop in rents is always possible, it would be contrary to the long term pattern of rising rents. So no matter what happens to the value you have predictable payments, often able to be made with the rents off the property.
When Buying an Apartment House they will insist on a positive cash flow before approving the loan, helping to create an even safer buying opportunity. Apartment House Loans will generally be fixed for a number of years 5, 10, or 15 before becoming adjustable or the balance due. I recommend getting a Fixed Rate as far out as reasonable possible. At this time the difference in cost for the longer term fixed rate is not that much.
Let Home Point Real Estate Point you in the right direction. Located in Brentwood Ca Home Point Real Estate provides service to the East Contra Costa County Communities of Brentwood, Oakley, Discovery Bay, Antioch, Pittsburg and beyond. Give us call at 925-260-4321 about Buying a Home, Selling a Home, or Real Estate Investing. Get the Free Real Estate Investing Book!
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