Houses: Is Now a Good Time to Buy?
Houses have a long-standing record of being a smart investment. Even when the real estate market experiences swings, house values generally even out within a few years and nearly always create a profit for the owner.
In today's market, houses are taking a beating and prices are on a downhill spiral. Industry reports claim house values have dropped nearly 10 percent nationally. Add in the explosion of foreclosures and you can easily see how this bleak situation makes for a buyer's market.
With interest rates lower than they have been in nearly 45 years and decreased market values, savvy investors are seizing opportunities to pickup distressed properties. However, unless you plan on keeping the property long-term, now might not be the best time to buy.
Real estate experts predict it may take several years for housing prices to rebound. In order to successfully invest in houses at this time, the right set of circumstances must be present before you plunk down your hard earned cash.
There are several housing markets to invest in. Currently, foreclosure homes and bank owned properties are in abundance and may or may not offer a good deal. Buying foreclosure houses comes with its fair share of headaches and challenges. While there are nearly 3 million vacant homes, very few are great deals.
Most foreclosure homes require a fair amount of repair. Some have been neglected for years, leaving the property exposed to vagrants and vandalism. Prior to investing in foreclosed houses, invest in a professional inspection and conduct market research. Comparable prices of houses sold in the area within the past six months can be obtained online or through a Realtor. The goal is to purchase the house significantly below market value. If that can't be accomplished, it's probably best to pass on the property.
Investing in bank foreclosures tends to be less risky than foreclosure homes. When houses aren't sold through auction they are returned to the bank. If creditor or tax liens are attached, the bank usually negotiates to have liens reduced or eliminated. Therefore, bank foreclosures usually have a clean title and don't require as much work.
Oftentimes, the bank will make repairs and prepare the house for sale. These expenses are factored into the sale price. Other times, the properties are sold "as is". In order to get the best deal, you'll need to engage in some legwork to visit the properties and assess the advantages and disadvantages of properties available.
Real estate owned property held by the bank typically has a higher price tag than foreclosures sold through auction. However, they are generally a better deal because you don't have to waste time removing liens, evicting the previous homeowner, or investing time into doing repairs or hiring others to them for you.
Investing in real estate right now can be risky business, but it can also net massive profits in the long-term. By investing now you can take advantage of lower prices and interest rates. Not to mention you can choose from a vast amount of real estate. If you decide to wait another year, those deals might not be as sweet.
Only you can determine if investing in houses now is the best option for you. If you're investing for rental property and can't afford to make the mortgage payment without tenants, you're probably not in a position to invest. If you want a good deal for your primary residence or to engage in house-flipping, there couldn't be a better time to take the plunge.
Published on May 25, 2008 at 09:28 PM | Comments: 2