Doesn’t it seem like out economy is taking a while to come back to solid footing? Is the news getting more and more depressing, to the point that you can’t seem to find any good news about anything anymore? Is the pain that we as Americans are feeling, or of people who we may know are feeling, becoming a bit too much to bear? It sure does to me, so I am sure many of you are feeling the same way.
This negative feeling can be turned into gold. Right now, at the time when the pain in our economy and the pain in our friends and family becomes too great, is exactly the time the prudent and intelligent investors begin to invest. These moments in history come along through the various cycles in our economy, but this down cycle is like one not seen since the great depression. During times of a down cycle, many people tell you to stay away from investing in Real Estate. It is only going to go down in value they say. Wait another year or two before investing so that you can “time” the market bottom. Well my friends, I would like to let you know of a little secret. Anyone who tells you they can time the exact moment when prices will stop declining is full of it.
What a prudent investor, or even a prudent consumer looking to purchase anything at any time looks at is what are the conditions currently. What are the interest rates that I will need to help me finance my property? What are the current prices for the purchase of my property in relation to what they were a few years ago? What kind of rents can I get for a rental property, and what would by fixed costs be each month in order to assess if the investment will generate cash flow? These are the questions the prudent investors are asking at this time. What is the answer to these questions? It depends on the individual deal you are looking into. However, there is almost no greater time in history to consider buying a rental property.
Take this as an example. A friend of mine purchased a 3 family property in which she will purchase as an Owner Occupant. She will live on one floor, and rent out the bottom two floors. At the price she will purchase the property for, she will generate $200 dollars per month in her pocket AFTER paying all expenses including the mortgage. Where is the risk is that? The prices and the interest rates are so low that it amazes me that more people are not looking into purchasing rental properties. They are a way to hedge the risk when purchasing housing as you leverage the tenants you put in the property to help you pay your bills.
I’m sure we have all heard of the stimulus package and health care package, yes? Well, when the government prints money at the frequency that we are currently on, there is only one result that is sure to follow…INFLATION! When prices begin to increase on goods and services, the government has one effective option, and that is to raise interest rates. The record low interest rates that we are currently enjoying will not be around for much longer. In fact, if consumers and investors don’t take advantage of the current rates, there is a good chance that we may see interest rates of over 10%, just like we had in the 1970′s.
There is a benefit associated to inflation however when it comes to holding hard assets such as real estate. Although prices have significantly fallen from their highs in the early part of this decade, inflation causes the value of these properties to increase. At the current low prices in the market, one can make a purchase today and 10 years from now enjoy a hefty profit. It is simply the economic cycle that we are experiencing right now. Do we have some new economic forces that we did not have even 20 years ago? Without a doubt. But by now means is it so different so as not to expect things will bounce back and our economy will reach another high point in the near future.
The demand for rental properties is increasing, and with this demand in conjunction with rising prices and inflation, the rental rates will be sure to follow suit. As people have been losing their homes to foreclosures, the demand for rentals has increased as these individuals can no longer purchase a home. These people were home owners in the recent past, and simply want a new start and a place to call home. These renters may be the best renters out there right now because they know what it is like to own, and have the skills necessary to maintain their own apartment / rental home.
This is the new decade of the real estate millionaires, and you can truly create a great future for yourself and your family is you make the wise decision to start purchasing property now. The stock market as we have seen is no place to place all your eggs in. Real estate is a much slower and safer investment, particularly in rental properties, because your expenses and return is generated from tenants, and the valuation of your investment does not change overnight as it can in a significant manner through investing in stocks.
I would be happy to talk to anyone interested in investing, as I myself am actively pursuing opportunities in this market, and have been finding many deals. My business is real estate, and my livelihood depends on it. Feel free to call me at 203-232-2462 and leave a message. I would be happy to chat with you.
Kind Regards,
Manolis Manny Sfinarolakis
Kind Regards,
Manolis
New Haven Homes, LLC
http://www.facebook.com/newhavenhomes
