If you saw that title five or six years ago you'd probably laugh. But now, the reasons to buy investment properties actually hold some weight.
The worst of the housing crisis is behind us. The Great Recession is over. The future is looking a little brighter in the world of real estate. People are even saying it's getting near the time where you've almost missed the time to buy. Yes, real estate is back. The storm is over. Growth is coming.
1. Low Interest Rates: Interest rates are still at all time lows. As in the lowest they’ve ever been in the history of interest rates. That mortgage your getting is at an incredibly low rate when you look back at the history of mortgage rates.
2. The Crisis Has Past. The real estate collapse in nearly six years old – the ideal time to buy was, perhaps, three years ago, but it’s not too late. Now you can buy something and even see the equity value go up pretty quickly believe it or not. But it's all about location in real estate.
3. Look Around You. Take a drive around where you live or are thinking of buying an investment property. I'm guessing you'll see construction work being done and homes being built. Yeah, there's a growing shortage of homes. Sure, there are still homes to be worked off and foreclosed, but growth in the real estate sector is coming. As they say in Game of Thrones, "Winter is coming". As they say in Batman, "A storm is coming". As they say in the real estate market, "Growth is coming".
4. Get Out of Mom's House. Kids are now moving out of their parent’s house and looking for a place to live. Yes, all those young college graduates who moved back with their parents during the Great Recession, are now finding jobs and want their own place to live.
5. Future Is Brighter. The greatest collapse in the real estate market has already happened. It's been done. The next real estate collapse won’t come for at least a decade or more. Well, who knows when the next one will come but it most likely won’t happen in the next ten years or twenty years.
6. Housing Shortage. There’s no longer a housing glut but a housing shortage – there’s very little housing inventory and people are actually getting pretty aggressive in their home search. Usually there's a surge in homes searches and sales in the Spring, when it's easier to move, but during the Winter there's been an uptick in real estate transactions.
7. Big Money Is Buying. Big time investors are buying up swaths of homes and apartment complexes. Actually, they've been buying them up for the past few years. See this story for example, millionaire buys every foreclosed home in Michigan county for $4.8 million. And then there's Goldman Sachs, which just bought a 27-property portfolio for $1.5 billion. I'm sure there will be more deals like this.
8. Positive Cash Flow. It’s nice to have cash flow from an investment property - a steady chunk of money from a rental you own. Rental rates are increasing as demand for housing increases, so you’ll see cash flow on your property when you buy a property with a low interest rate.
9. Appreciation. Today, if you buy property you might even see your property appreciate within the next few years. Not as many homes are under water these days. Instead, homes are actually increasing in value rather quickly in some parts of the country. Yes, real estate is always local, but for the most part the trend is turning higher for home prices.
10. Stable Real Estate Industry. There’s still a bit of fear in the real estate market, so there’s not as much competition for investment properties just yet, though there will be soon. But it's not like is used to be. Remember when everyone and your mother was involved in real estate on some level six years ago? Well all those folks are in other industries or jobs. They’ve been beaten back by the housing crisis so the industry has stabilized - yes, real estate is no longer unstable.
11. Search for Higher Yield. Where else are you going to get a better return than real esate? Where else is the risk as low as in real estate? Stocks are risky. Treasuries or CD don't give you much return. The search for yield is also increasing the demand for real estate.
12. Long Term Value. Protect your wealth from inflation. The value of the dollar has declined due to all the Quantitative Easing by the fed. But the need for a place to live is always going to exist, and the value of a home will hold it's value over time or increase when inflation comes.
13. More Babies. Yes, parents may have held off having that second or third child during the recession. Now that things are improving and getting better, they might just want to have another child. And with another child they're going to need another room. So yeah, another reason housing demand is going to pick up.
14. Foreign Investors. The last few years a lot of foreign investors have come to the United States to buy real estate. One of the largest group of investors is the Chinese. What with the potential for a real estate bubble in China, investors are moving their money to the United States, where the crisis is largely in the rearview mirror.
15. Experts of the Housing Crisis Say Bottom's Here. Calclauted Risk, perhaps the best blogger about the housing market, says the bottom in housing is here. And Yale economist Robert Shiller, who predicted the housing bubble, says the bottom is here for home prices. If these doubters and experts are saying the bottom is here then it's time to listen.
16. Foreclosures Aren't All Bad. Those who have foreclosed are looking for rental properties. While on one hand too many foreclosures are a negative, as they bring home values down, but on the other hand they are a positive, since those people will now need a place to rent.
17. Short Sales. Short sales are now favoring home buyers. Banks want to unload properties, they don't want to act as mangers of properties - mowing lawns and maintaining the upkeep of a property, they are willing to sell houses that are well under water - the banks will take the loss and move on.
18. Buy For the Long Term. It's tough sometimes to look out say 30 or 40 years, but if you could you'd see that real estate is a positive investment long term investment. It's not like people are all of a sudden not going to need a house or an apartment to live in.