We are at a unique crossroads in our nation ? one that we may not see again for many, many years. I suppose you could call it ?the perfect storm.? Never before in my lifetime have the stars aligned so closely to make real estate an exceptional investment for the long-term, smart investor. This article is going to look at seven reasons why NOW is the best time to invest in real estate.
1.) People are Afraid
One of my favorite Warren Buffet quotes of all time is ?be fearful when others are greedy. Be greedy when others are fearful.? While I?m not advocating that you go and commit one of the the seven deadly sins here, I do want to bring up this point because right now ? people are afraid. The housing collapse of 2007-2008 left a lot of people jobless, homeless, and scared; and rightly so. The feeding frenzy rising up to the collapse of real estate market tricked a lot of people into making a lot of dumb mistakes and betting a lot of money on something that couldn?t be substantiated. Right now, prices are still low and amazing deals can be found.
2.) Values are Climbing
It?s not simply enough, however, to buy when people are afraid. People were afraid while the market plummeted month after month ? but it wouldn?t have been a great time to buy then (though, by purchasing smart ? even that would have been okay in the long run. I did it!) However, today that fear is subsiding and values are climbing higher and higher each month. The real estate market is a cyclical event, and prices are on the rise.
3.) Rates are at Historic Lows
As if low prices and rising values are not enough, one of the most significant benefits of investing in real estate today are the historic low rates that investors can obtain. When you are investing for the long haul, cash flow is king. Cash flow is the extra money that you get each month after the expenses are paid ? and when your biggest expense (your loan) is at the lowest levels in history ? your cash flow is at the highest levels possible. For example, an 8% interest rate (the average rate prior to 2003, according to?BankRate.com) 30 year fixed mortgage would cost $733 per month for a $100,000 loan. In comparison, at 4% (an average rate today,) that payment would be just $477 per month ? providing over $250 per month in extra cash flow for that property.?At the very least, go get prequalified so you can jump on an opportunity when it arises.
4.) Employment is climbing
The outlook in the US for employment is also on the rise, increasing the ability for renters to pay their bills. The US?Labor Department?expects job growth to continue to climb, led by the healthcare industry and the aging population of the ?baby boomer? generation.
5.) Managing Tenants is Getting Easier
At no other time in history has managing tenants been easier. Whether you choose to hire a property manager to look over your properties or become a landlord yourself, the tools and resources available today are extremely helpful. For example, the internet has made running background checks on tenants much easier (to learn how, check out?my 5600 word Ultimate Guide to Tenant Screening) and advertising your unit is as easy as posting on Craigslist.
6.) CDs and Savings Accounts Just Aren?t Cutting It
While the economy continues to improve, job outlook is positive, and the real estate market climbs ? there is one area that still lags: the interest you are getting from the bank. According to?BankRate.com, the average 1-year CD Rate is paying less than 1%, while I generally don?t accept anything less than 15% on a real estate investment. This is simply not the time to stick your money in the bank to grow.
7.) You Want to Be Financially Free
Finally, now is the time to get into real estate because in ten years ? you are going to kick yourself and wonder why you didn?t. Now is the time to get started because time doesn?t wait for you ? it keeps moving on. If financial freedom is something you long for ? you need to start planning today.
This doesn?t mean going out and buying any old piece of property and expecting to make a killing. It means doing your homework and learning the ropes. It means finding the best niche for your market and the best strategy for your goals. 90% of properties are not a good investment ? but for the 10% that are ? now is the perfect time to get going! You don?t need to sink all your money into real estate ? but now is the best time to add that avenue of wealth building to your investment strategy.
What do you think? Do you believe now is the time to invest? Let me know in the comments and let?s talk about it!