Real estate investing is a hot topic again. It's a funny thing how one day everyone wants to dump their real estate investments and the next day everybody is jumping back in. Well, it's no wonder. The real estate investing community went through such a gyration, including all of the crazy buying that speculators went through over the last few years. The last two years have been one of the worst in history.
Yet, real estate investing is back on the upswing. Why do you ask? Because property values have dropped so low that the numbers make sense again. Housing prices in many cities and states have dropped 20%, 30%, 40% and even as high as 50% in some hard hit areas. This drop in price has made the homes more affordable. The government has also stepped in to help new home buyers purchase these homes. As well as discouraged "bad behavior" on the part of the speculators.
Perhaps you were asking how does real estate investing make sense in this recession period. Allow me to do the math here, if you can finance a $100,000 mortgage at 6%, your mortgage payment is somewhere in the $600 range. If you add property taxes and insurance, your monthly outlay would probably be around $750. Assuming you can rent out that property for $900 a month. From this, you can see that you now have the basis for a cash flow positive investment.
Having that real estate investing scenario, it simply does make sense to hold on to that property for 10 to 20 year more and get great financial benefits. Why do I say so. The logic is that outside of general maintenance on the properties, you're getting someone else to pay for your mortgage. Also if property values increase over time, you could get even more benefits from a big windfall, when it comes for you to sell the property.
Not everything works as planned, of course. That's what happened over the last several years. Real estate investing people bought up properties at extraordinarily high values. And, then the market crisis hit, properties lost their value, and no one could re-finance or carry the loan payments any more.
This drastic change of fortunes could happen to anyone. Real estate investing is not something that anyone should just go into haphazardly. Many of the age old phrases, such as "location, location, location" are especially true in real estate investing. Also, make sure the numbers "pencil in." If you think you're going to take a cash flow negative property and hold on for property value increase think again. Those markets may never come back again.
In doing real estate investing, it is extremely important to note all mentioned above. Keep in mind that there are tons of gurus (e.g. Donald Trump, Robert Allen, Carlton Sheets), companies, groups and communities willing to help you determine when and how much to invest. Also, be very careful because there are many fly-by-night gurus, who will try to sell you a bill of goods. Just make sure that the guru you are following is in the business for long years and is being followed by many.
Yet, real estate investing is back on the upswing. Why do you ask? Because property values have dropped so low that the numbers make sense again. Housing prices in many cities and states have dropped 20%, 30%, 40% and even as high as 50% in some hard hit areas. This drop in price has made the homes more affordable. The government has also stepped in to help new home buyers purchase these homes. As well as discouraged "bad behavior" on the part of the speculators.
Perhaps you were asking how does real estate investing make sense in this recession period. Allow me to do the math here, if you can finance a $100,000 mortgage at 6%, your mortgage payment is somewhere in the $600 range. If you add property taxes and insurance, your monthly outlay would probably be around $750. Assuming you can rent out that property for $900 a month. From this, you can see that you now have the basis for a cash flow positive investment.
Having that real estate investing scenario, it simply does make sense to hold on to that property for 10 to 20 year more and get great financial benefits. Why do I say so. The logic is that outside of general maintenance on the properties, you're getting someone else to pay for your mortgage. Also if property values increase over time, you could get even more benefits from a big windfall, when it comes for you to sell the property.
Not everything works as planned, of course. That's what happened over the last several years. Real estate investing people bought up properties at extraordinarily high values. And, then the market crisis hit, properties lost their value, and no one could re-finance or carry the loan payments any more.
This drastic change of fortunes could happen to anyone. Real estate investing is not something that anyone should just go into haphazardly. Many of the age old phrases, such as "location, location, location" are especially true in real estate investing. Also, make sure the numbers "pencil in." If you think you're going to take a cash flow negative property and hold on for property value increase think again. Those markets may never come back again.
In doing real estate investing, it is extremely important to note all mentioned above. Keep in mind that there are tons of gurus (e.g. Donald Trump, Robert Allen, Carlton Sheets), companies, groups and communities willing to help you determine when and how much to invest. Also, be very careful because there are many fly-by-night gurus, who will try to sell you a bill of goods. Just make sure that the guru you are following is in the business for long years and is being followed by many.
About the Author:
Darryl Degenhardt, a well-known professional who understands that superior client service and dedication are smart business. He has found great opportunities in real estate investing.
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