Have you been considering investment property? Many people know that investing in rental property is a good way to diversify their portfolio, but very few actually act on that knowledge. As a rule, most individuals are not “risk takers”; they prefer a “safe option” when it comes to investments. As a matter of fact, I read recently that most Americans rarely change their investments or move funds from one fund or stock to another. If this describes you, you are not alone. A long term investment may be the answer for you. If you look at Real Estate over any 20 year term, you would be hard pressed to find a 20 year span of time that it has not had a good return on investment and in some cases great ROI.
In today’s real estate market you have so many variables pointing to it being one of the best long term investments you could make. We have excess inventory of homes available, prices equivalent to 10-15 years ago in many cases and interest rate at historical lows. Investment loans are commonly below 6% interest on a 30 year fixed mortgage. For baby boomers like me it is an opportunity to secure your retirement income through rental property. For the “X”, “Y” and “beyond” generations, you could not only secure your future, you have the opportunity to amass huge fortunes by getting started now as a real estate investor. Under most circumstances you will need 20-25% down on investment property. Although currently there are other options, like Fannie Mae’s offer for investors at just 10% down. What other investment allows you the chance to invest, say, 20% but reap the benefits of 100% of the appreciation?
On a $100,000 purchase you put in $20,000, but when the property appreciates to, say, $150,000 in 10 years and maybe some sweat equity you gain $50,000 from a $20,000 investment. This does not take into account the income you earned through the monthly cash flow during those ten years. If the monthly income is not needed then paying down the principle with the profits can gain more equity in a shorter period of time. By the way, lots of people don’t want to be landlords and some shouldn’t. There are qualified property management companies that will handle the “landlord” part for a very small fee. Another option would be land purchases–low maintenance, less hassles but normally a larger investment required. For those of you sitting on a pile of cash that is not earning anything to speak of, you have the greatest opportunity in the land and lot market that you are likely to see ever. Banks are not really excited to lend money on land right now so any seller that must sell must be motivated. Many of the land sellers are the banks, especially in developed and undeveloped lots.
So whether you have been considering investing or not, give us a call or e-mail and I will be glad to answer any questions you may have.
If you are wondering if you qualify for an investment loan, talk to your favorite lender. I will be glad to recommend loan officers if you need assistance.Tags: Investing