We have all been experiencing a buyer’s market for the last three years. The real estate market is a cyclical market and with the surplus of available homes, it’s only logical that you can negotiate a great deal! Now is the time to find a great deal and hold it for the next market swing to capitalize on the appreciation and demand that will follow in the next seller’s market.
As an investment specialist in real estate, my primary focus is helping investors seize great deals and properties for long term wealth accumulation. No matter where you are in your investment experience, I have helped the new and seasoned alike. My advice to anyone that is being conservative in their investment endeavors in this time of financial crisis and the bear market we are facing is to look at real estate. Real estate over the course of time has had it’s swings, but it will always recover and continue to appreciate in value. Unlike the stock market, it’s a tangible investment, and is something of necessity, whereas, everyone needs a place to live, and will never be worth nothing! The majority of people and corporations in this country will contribute their wealth to the holding and accumulation of real estate.
Real Estate nationally has seen a reduction in value, but it’s very modest in comparison to the stock markets losses. On average nationally, real estate has had a correction of roughly 10%. Whereas with the stock market, we have seen losses of roughly 20%-30% this year! Locally, in the Hampton Roads area, we have been very fortunate in our real estate market. Due to the large volume of military related personnel, our market has been one of the best in the country. Last report I viewed had us in the top 5 nationwide! We have had value corrections, however they have only corrected between 2%-5% area wide. Not bad!
The value corrections however are only one aspect of real estate as an investment. Other benefits of owning rental units include the monthly cash flow from the excess of rents vs. expenses. That should be a consistent monthly gain that you own the property given that it’s rented. You will also benefit from the tax breaks and shelter that they provide such as the interest paid, taxes, any repairs associated with the property, and the yearly depreciation. On top of all those benefits, each month that your tenants pay their rent and you pay the mortgage, you are paying down the loan amount, meaning that you are creating more equity in the property.
That leads us to making money in a down market. There are still ways to purchase the properties even though the financial lending has dried up some. First and foremost, if you plan to occupy one of the units up to a four unit complex, you can still receive financing between 100%-97% of the loan amount. If you have some cash sitting aside in a bank account not receiving the interest you deserve, and you do not with to occupy the unit, you can put between 10%-25% down to still get financing. More on the creative side of things, if you have money in an IRA or types of Life insurance, Money markets, or even some stocks or mutual funds, you can borrow the money from yourself without cashing out to come up with the down-payment for a property and then pay yourself back. Keep in mind, the money you put down on a property is not money lost, it will sit in the property and can be taken out at a later point if desired.
As you can justly see, this is a great time to purchase properties. The next market swing is just right around the corner and you can leverage yourself to make large amounts of money. Remember, the key to building wealth is to know when to purchase and to purchase at the right times. That time is now. You can negotiate some great deals in the market currently depending on the property and the owner’s motivation for selling. I have seen deals negotiated 10%-20% off market value. So besides all the other gains I mentioned previously, you just capitalized on another big gain just for purchasing now. Once the market swings back and the gains are realized, you will have made a sound and just investment. Much less riskier than the stock market and much easier to control and manage too! I am here to guide you into making the right decisions and maximizing your wealth, as it not only benefits you, but myself included. Call with any questions or thoughts.
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