I have been on the lookout for some new real estate investments during the last few months. Most of the time, I have been met with unrealistic prices and expectations from the sellers. They still dream of the good ol days of 2005, where they could pick a number out of the sky and watch multiple bids come in.
But now, things seem to be slowly coming back to earth. Whether it be a short-sale, or more favorably a seller that just needs to get out of a property, prices are starting to get to the levels where investors can consider coming back in and establishing sound rental properties. Based on the dynamics of the still depreciating market, rehabbing may be a little ways off, but rentals are starting to look attractive. 
I looked at a few houses this weekend in the D.C. metro area and after running the numbers, there are a couple that will receive offers. Of course, they will not be at asking price. I still believe that offers should be at about 80% of asking price, depending on the property, and especially as an investor. In a declining market, you do not want to be caught holding someone else's bag at an inflated price. I have a few friends that bought in early 2007, thinking that they were getting a "deal", only to see prices sharply fall after the so-called subprime meltdown around August 2007. Although, I believe the brunt of that meltdown is behind us, it is very important to still stick to the numbers and not compare anything to the levels of 2005 and 2006.
This market is starting to look encouraging for the investor again. Just make sure the numbers work and you do not buy on emotion.
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Real Estate News
Monday, May 5, 2008
Is real estate investing coming back?
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4 comments:
The 2005 boom may or may not be back but it's important for real estate businessmen to have a good and up to date look at the market. Knowing current trends in property, government policies and surrounding may be obvious for sale.
The current trends are positive as compared to the early months of 2008. Some peoples are getting back and hope there will be good business then earlier months.
It is good news that the market is getting better and the trend is changing. The investors are going to get a good time here. Hope they will be getting it in the right way.
Yes! I strongly believe that real state investing is coming back big time, now is a good time to invest.
You mentioned getting the property at 80% of value in order to hedge the fact that the market may still be swinging downward. While I think it's definitely a smart move to buy something below value when I invest in real estate, there is also something to be said about buying a property on terms. You don't always have to get the property for the price you want if you can get the terms you want. For example, I'll pay you a million dollars for any home, assuming I can structure the terms in such a way as I can cash flow that property. I think in our current environment, you just need to be a little more creative.
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