This is a continuation of last weeks blog post “NOW IS THE TIME TO INVEST IN REAL ESTATE”.
Are you a first-time homebuyer, a current homeowner looking to move up, or a potential investor looking for positive cash flow? If so, you should strongly consider that now is the time to pull the trigger and invest.
Over the last 10 years the prices of commodities has increased 178%. Just in this last year alone commodities have soared up 23%! Translation: almost everything is becoming significantly more expensive to buy; copper, tin, lead, lumber, granite, steel, etc. Our homes are built from these commodities. Consequentially the cost to build a home has risen dramatically over the last decade. Just recently on April 18, 2011 the Wall Street Journal reported that many companies have been keeping their prices down and taking losses but can no longer sustain the practice. The only option left to them is to raise prices.
Now, home building costs may have risen (and continues to rise!) but the cost to buy a home has not. Currently in many areas of the U.S. houses are selling for significantly less than they cost to build. Even if you exclude the land value the selling price is still less than the cost! If you are waiting patiently to find a bargain on a home, your waiting is done.
In PART I of my blog posted last week I discussed how lower-priced, smaller homes were the first group in the housing market to enter foreclosure followed by larger, more expensive homes. Where have the owners of these homes gone? Good question. The answer is; they haven’t gone anywhere. Due to damaged credit, most are no longer in a position to buy real estate so they must rent instead.
The flood of new renters entering the market has created a very unique and attractive situation for investors. The price to rent a home is high and the price to buy a home is low. Translation: positive cash flow. Not only can investors purchase homes for significantly less than their building costs, but they can create immediate positive cash flow as well. Add into the equation that mortgage rates are still at historic lows.
If you are interested in leveraging on today’s housing market contact me with your ideas, questions, or goals and I will work to show you several options. For example: Investors…we are purchasing beautiful, good location “positive cash flow” single family properties in the fastest growing and financially secure city in the US, yielding 20% plus “cash on cash” returns each year with as little as 20% down. That is going to be my next investment!