Is now a good time to invest in real estate? Prices might be higher than they have been over the last five years, but there is one factor that makes investing worthwhile.
Looking to sell a home in Southern California?
Looking to buy a home in Southern California?
When is it a good time to buy an investment property? Is now a good time?
Market prices are definitely higher than they have been for the last four or five years. The good news is that, because interest rates are so low, it is still a great time to buy an investment property—especially if you are going to have a mortgage on the property. Ultimately, buying now allows you to keep your interest over the long term at a lower rate.
When deciding whether or not to buy, you need to look at the amount of income you will create. You also need to determine your long-term investment strategy.
If you want to get a quick turnaround investment, that is going to have a much higher risk than a long-term buy and hold.
If you are buying your first home, for example, it’s very common to see someone buy a two or four-unit property, live in the property, and rent out the other unit for a couple of years. That way, you can get an investment property at a low interest rate, build your personal wealth, and save up for a down payment on your first single-family home. You can also hold onto that investment property after you buy your first home and continue to build your wealth.
Interest rates are still low enough to make investing worthwhile.
Once you buy that single-family home, you do have to put more money down as the underwriters don’t necessarily believe that you’re going to move into it. That allows you to maximize on your down payment on that two- to four-unit property, as you may only have to put 3% to 5% down on that. That’s a great investment opportunity.
Another option is to buy multiple properties. You can buy single-family homes, duplexes, triplexes, fourplexes, and even get into commercial properties, which are five units and up. If you buy a number of properties over time, that’s kind of like dollar cost averaging.
I have one client who bought multiple properties in the area at the bottom of the market. They have now moved out of the area and sold most of those properties off, taking advantage of this great market appreciation.
Ultimately, anytime is a really great time to get into investing. If you would like to learn more about investing in this market, give me a call or send me an email. I would be happy to help you!
