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
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
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Opportunities vs Obstacles in the Housing Market
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