Ideas and Opinions from Donald Trump and TrumpU Faculty.
Time is now for Real Estate Investors
We have in our country an interesting dynamic going on as it pertains to the real estate investing market. Due to the generically sluggish sales of both new and pre-owned homes, and an apparent historical glut of foreclosures we are looking at a tremendous buying opportunity in much of America. Add to that the normal cycle of “non-distressed” homes for sale by move-up or move-down sellers, and even the shrewdest of investors should be salivating.
I have just mentioned about the supply of inventory being bountiful, now let’s talk about the demand for these properties. The percentage of people who can now qualify for a loan has greatly diminished with the recent demise of the sub-prime mortgage markets. Now, unless you are a candidate for FHA financing, with less than perfect credit there is not much you can do but lease or lease-purchase until you have some significant money saved for a down payment. This means that investors should be bracing for an increase in demand for their properties. When demand rises, we all know that rents will follow suit thus giving investors more cash flow to operate.
Now is the time for investors to increase the size of their real estate rental portfolios by adding income producing properties. Do your homework first on what rental rates are in the area as well as figure out what the anticipated hold time might be; then make your move! I am not sure when we have had such a prolific combination of great interest rates, surplus inventory of under-valued properties, and a marketplace with “soon-to-be” upward pressure on rent rates. That’s my two cents...spend them wisely.
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6 Comments
However, to predict cash flow may be sluggush due to a very poor economy and getting worse. This may be one of the worst tax years if not planned.
Be careful and know your limits!
In this market, it is crucial to understand and use sound real estate investing techniques. Study up and know the trade if you're going to dive in.
And if you are looking to invest in rental properties, be sure to take a look at the job market and city growth rate. For example, I live in Las Vegas, NV and in over the next few years there will be thousands of new jobs opening. Like the post mentions, many of these people won't be able to qualify for a loan and you need to fill their needs and wants.
John
ceo and founder of http://www.eventurebiz.com
1. MANY American consumers are up to the neck in non-mortgage debt and cannot really afford to live as they do without even considering their mortgages. Add in the current direction of the economy and it should be obvious what lies ahead for these folks.
2. Homes are still over-valued. In the area that I live in, which didn't even make the list of caustic markets, homes are still priced about 20-40% over what they should be going for. People just haven't figured it out yet and they don't want to believe it. I'll be waiting until they finally come to terms with their TRUE bargaining positions. I suspect that I won't have to wait more than a couple more years. We knew that things were ridiculous 5yrs ago when we bought our home and they have only gotten worse in the meantime. Frankly, I don't know how the shysters managed to maintain this fantasy as long as they did.
Unless you are able to buy VERY low, and I haven't seen much (if any) of this yet, I would imagine that you can count on flat gains or outright losses buying at this point. There is certainly no shortage of homes or business real estate out there....and as people (investors) get more desperate for cash flow, their standards tend to drop in tandem. This translates to neighborhoods depreciating relatively quickly, which is not a godd thing for anyone.
I'm in a West Coast city and in the past two months have purchased two homes, both in central/urban areas close to everything, for 2002-2003 prices. One was bought for HALF the price of a comparable sale across the street - from January 2008. I can say one thing, there ARE deals out there, and I for one completely agree that desireable, urban locations, next to downtown areas, are THE way to go. Forget suburbia USA and the cheap tract homes. If you can work a deal in the 'in' place to be in your city, then grab it now. Not to mention, after 20% down I'm sitting with a 6.0% 30 yr fixed mortgage. That doesn't exactly suck.
What I see happening right now is nearly everyone in agreement that it's NOT the time to buy. Everyone, thanks to the media, thinks it's doomsday out there. The end of the world! It's not a pleasant picture, but in a trying time such as now it's the ripe time to do what nobody else is doing. BUYING. Pick some real estate up now and see where you stand 5 years from now.
Thanks for your post...perhaps you would also agree with my article about gas prices and their effect on real estate blog. Check it out and post there as well!