Many, many comments on yesterdays post asking for more information on why buying an investment now is so attractive. It’s simple – our prices are low, our rents relatively high and the historically low interest rates mean carrying costs are very very low. For example: Say you find a home for sale at $100,000 that would rent for $100 a month. Property taxes would be approximately $100 a month and property insurance would run $75 a month. With $25,000 down the mortgage would be $75,000 and assuming a 4% 30 year investor rate the principal and interest would be $358 a month. Add the other costs and you get a total payment under $550 a month – do your own calculations for repairs, maintenance, and of course we’d like to manage the property for you at 8% per month. If you took 15% or $176 a month for vacancy and repairs and and property management of $88 you’d be netting $1100 less $810 (approximately) or $290 per month positive cash flow – $3480 a year or a 13% return on your $25,000 down. Of course there are closing costs etc but you get the picture. Large institutional investors are making multiple offers everyday! Prices will go up on our lesser priced easily rentable homes for sale.
Home Prices are Very Low
After the infamous ATLANTA market crash of 2007, housing prices plummeted and they have remained at or near bottom for quite some time now. For buyers and investors this translates to one of the best opportunities – especially when combining low home prices with record low interest rates. Not only is the home affordable, but so is the cost to borrow money to buy it.
Invest for Pennies on the Dollar Now – Enjoy Sizable Returns Later and Cash Flow now!
When billionaire investor Warren Buffett was recently asked about the best investment sectors of today he suggested investing in single-family homes on a 30-year fixed rate mortgage. This advice came in light of current market conditions that end up in pennies on the dollar investment schemes. Buying a home today for under $200,000 will easily yield more than double the returns by the time the mortgage is paid off. Many savvy homeowners today are also making extra payments to shorten the term length of their mortgages.
With the plethora of investors and buyers that are delving into the property market to seize the opportunities out there, many have been turning to any means possible to come up with the down payments. Whether dipping into savings, IRA”s, ROTHS, or obtaining a home equity line of credit on an existing home, converting the purchased home into a rental property – buyers are getting creative.
If you would like to explore your options and find out how you can take advantage of the amazing investment opportunities right now, contact us today. We would love to guide you and come with up with some ideas that work for you. Call me at 678-232-0927