In a word: YES! Now is the best possible time to invest in real estate. Of course you are wary, and with good reason. If the ongoing recession (and subsequent wave of foreclosures) has taught us nothing else, it has helped many to learn the hard way just what happens when people take on a home loan they can’t really afford. However, this is just a good reason not to get in over your head (read: no variable interest-rate loans…oh, and monthly payments that are a quarter of your monthly pay at max is a pretty good plan, as well). Unfortunately, the lending industry has become equally wary of giving money to high-risk candidates. So while it might be a great time to invest in real estate, the caveat is that you must have fantastic credit (and potentially some collateral) to pull it off. But if you’re on the fence, here are a few reasons why you shouldn’t wait.
1. Foreclosures. Probably the best reason to buy now is that there are so many bank foreclosures on the market. While you can certainly go to an auction for a great price, you’ll need cash on hand to take advantage of this type of sale. If you go through a bank instead, especially if they’re the ones who hold the title, you’re still likely to get a great deal since they’re just looking to recoup whatever they lent originally (or even a portion of their expenditure). Of course, you should go into the deal with open eyes; most foreclosures are “as is”, meaning you have no recourse if there are major defects. But you should be able to spruce the place up with all the money you save on the mortgage.
2. Short sales/pre-foreclosure. Like foreclosures, these homes are often sold at drastically reduced prices. The difference is that you’re still buying them from a private owner (not the bank). The only thing you want to be aware of is that some homes on short sale have additional liens on the title. Any good realtor should catch this, but if you opt to skip closing costs by making a deal without realtors, just be aware that as the new owner of the home, you may find yourself on the hook for a second mortgage on the property. Due diligence is required if you want to make this type of purchase solo.
3. Low interest. Holy cow, are interest rates ever low!!! With the prime currently holding at under 5% for 30-year fixed mortgages, you absolutely cannot go wrong by taking out a loan now instead of waiting. Don’t kid yourself; it’s not going to get any better than this, so don’t hold out for something better.
4. Cheap renovations. Since many homes will need some kind of upgrade (or several) before you can think about putting your investment to good use (by cashing out), you need to be aware of the current cost of renovations. With the market for new building slow, you can find some pretty cheap prices when it comes to contractors and their labor crews. Building materials can also be had at low cost and haggling is pretty much expected in a buyer’s market. So take advantage of the timing to purchase property and get it ready for resale.
5. The market WILL rebound. Do not doubt that it’s coming, and soon. Now is the time to buy, and if you can hold out for a few years, you stand to show an incredible return on your investment.
Breana Orland writes for PO Funding. With purchase order financing you can grow your business and pave the way for more.
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