Prices Are Up and Rental Increases are Slowing So Why Continue to Invest in Real Estate?
In the Real Estate world, this is a great question and one that is surfacing more and more lately. There is no doubt that in certain locations the window of opportunity has closed and in other locations it is in the process of closing. The key word I trust you have already identified is (location) we all know real estate is all about location so being extra prudent in your diligence now is very important.
Let’s address the Why invest now portion of this question
As many recent surveys have pointed out is that Real Estate is considered to be the safest investment during the uncertain times that make up the current economy. Many are talking about cashing in their stock market type investments as individual investors have very little control over these investments and they simply are not confident in where the current markets are heading in the midst of this quirky election that we are in.
Just yesterday I was talking with an investor who has half her investments in real estate and half in stocks. She lost total control of her stocks and they are in an uncomfortable spiral. Meanwhile her Real Estate investments are all in her control and doing well.
There is no better feeling of control during uncertain times than having tangible assets. Real Estate is most favored as everyone needs a place to live. Gold and precious metals are also an area of increased desire now as they too are tangible investments however it is a tangible asset that does not fulfill a need like housing does and as for control over the investments, there is none.
Everyone needs a place to live and there is a growing desire to live in a rental home. Home ownership has been decreasing and many of those renting are feeling more comfortable now renting over being strapped to a mortgage. Many contemplate job changes and perhaps re-location so renting is favorable to these concerns.
It makes sense that when the demand for rentals is strong (and investing in real estate provides the most controls for the investor and indeed it is a tangible asset) that investors flock to cash flowing real estate.
But prices are higher
Indeed prices have gone up over the past few years, there are however, many locations in the country where prices are still undervalued and their local markets are growing. When the whole country is on sale, investors as well as “wanna be” investors are everywhere. As the prices start to rebound as they are you have to look harder to find the good deals. The good news is many “wanna be” investors drop out of the game as they feel they missed the opportunities. This leaves a smaller investor audience and as a result prudent seasoned investors continue to thrive.
It is lonely at the top
I love this saying “It is lonely at the top” while the majority are giving up, the best deals are left for the dedicated investors willing to climb to the top of the tree to pick the best fruit. What is left in these times of less abundant inventory and fewer great markets to invest in, is serious investors who are willing to do the diligence.
Rental increases are cooling
There is no more exciting time for an investor than a time when rental prices are on the rise. However, as we have witnessed during the past real estate bubble prices cannot rise forever. A market that is increasing is a great thing but increase at a manageable level provides for SUSTAINABLE rents and returns.
SAFETY AND SUSTAINABILITY
This is ultimately why investors love real estate, it is safe and sustainable. All you have to do is invest in the best locations, do your diligence and look for sustainability over vulnerable unrealistic expectations of getting rich quick.
If you would like some help with this, we do this diligence every day. Give us a call, we are happy to assist in strategizing the best plan of action for your individual wants and needs.