Is It Time To Invest In Real Estate?
2008-12-20
Interest rates have been down for an extended period of time. The stock market has been doing well lately but its hard to forget all the losses accumulated when the dot-com bubble burst. Is this a good time to invest in rental property?
I think this is a great time to invest, especially if you want to keep the property for a period of time. There are a lot of homes on the market because of the large number of loans made to people with less than stellar credit during the recent housing boom. Many of these loans were made with adjustable rate mortgages. Some homeowners have seen their initial monthly payment double after an end to the 2-3 year freeze on the interest rates. People are also losing homes because they are losing their job. I’ve never before seen so many foreclosures in the marketplace.
Before you invest it is wise to determine why you want to invest in real estate.There are many different reasons that draw people to the real estate arena. You might want to invest for additional monthly income (cash flow). You might want to invest for retirement income (appreciation). You might want to accumulate a lump sum of money. You might want to to get extra money for your child’s education. Or you might have inherited property or moved from a home and want to turn it into a rental property.Knowing your end game will help you make a wiser decision when making that purchase. If you want monthly income the cost of the home must be kept low so that you will have a nice margin between your mortgage amount and your rental income. If you plan on selling the home when you reach retirement age or when your kids go off to college you want to make sure you get a home in a good stable neighborhood where the value will appreciate.
Once you’ve done your homework, don’t be afraid to buy that first investment property or add to the ones you already have. One word or caution: It’s easy to buy right now but its hard to sell. Make sure you have the financial stability to hold on to the property for a period of time if necessary. Don’t use money that you’re going to need in the near future.