Investing in a Slow Real Estate Market
Realtor Magazine had an article on investing in a slower market. Many real estate professionals are buying property today agreeing that purchasing investment property is less about market timing than good analysis. You may find more properties that meet your yield requirements in a slower market where prices have declined and rents have remained stable. Lower initial purchase prices are inconsequential if the rent and vacancy rates do not support your income expectations.
While cash flow, appreciation, leverage, and taxes all figure into the investment analysis equation, the bottom line for most buyers is positive cash flow after paying the mortgage and taxes. Investors appreciate that a break-even investment can be a good when you are in a position to hold them longer term. I recommend looking for properties that will return 3% to 5% for single-family homes and condos, and 7% to 8% on three to four family properties. These returns are very attractive compared to current market performance.
The most important part of purchasing an investment property is being familiar with the neighborhood and understanding the trends in the market. Investment properties are good sources of passive income generation so long as they are filled with tenants and the rent rates cover the mortgage and maintenance expenses. Please contact me if you have any questions on your investment needs.
