Opportunities vs Obstacles in the Housing Market:

While there may be many obstacles in the economic market and it may not make sense to flip houses unless you can afford to hold on to a property for the year that it might take to sell.  This market leaves tremendous opportunities for people. Two tremendous opportunities are for investors purchasing rental property and for first time home buyers.

Right now there is lots of inventory, very low mortgage rates, and motivated sellers. There is also an increase in the number of renters as it is harder for buyers to own. If you were ever considering purchasing a rental home as an investment this is the time to do it. During the top of the market, you could not rent the property for a high enough amount to make sense. But now, housing prices have dropped, interest on loans are low, yet rents have not followed suit.

Perhaps the biggest barrier for purchasing is where to get the money. The no money down loans are pretty much gone. Most investors should expect to put 20% down on conforming loans due to the changes in mortgage insurance and restrictions. The way to pick a deal is to consider cash flow, appreciation, leverage, and taxes. Most investors want a positive cash flow. A break-even investment can also be good if you plan to hold the property for more than 5 years. Be sure and pick a house that has attributes good for selling. Houses in good school districts or near jobs and in the moderate price range will attract the largest pool of tenants as well as buyers when you decide to sell.

First time home buyers also have a great opportunity at this time. With the price of homes down and interest rates in the 5%, monthly payments are lower than ever. FHA loans require only 3.5% down and often with motivated sellers you can negotiate for the seller to pay the closing costs. There is also a $8,000 tax credit for first-time home buyers at this time. A first time home buyers is defined as someone who has not owned a home for 3 years. First time home buyers do not need to sell a home in order to purchase a home so this gives them some negotiation power when they come to the table to make a deal.

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Opportunities vs Obstacles in the Housing Market

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