Houses have always been a smart real estate investment. Even during a soft market, house values typically bounce back quickly and generally create profit for the homeowner.
In today's volatile market house prices are taking a beating. Real estate experts state house values have dropped ten percent nationally, with some areas reporting decreases as high as seventeen percent. Add in the massive amounts of foreclosures and it can appear as if now would be the worst time to invest.
In reality, this bleak situation makes for a buyer's market. Interest rates are lower than they have been in nearly five decades. Coupled with decreased market prices, many investors are seizing the opportunity to purchase distressed properties. However, unless you plan to keep the property long-term, investing in houses now may not be the best investment strategy.
Industry experts predict it may take two to three years for housing prices to rebound. In order to become successful investing in houses, the proper set of circumstances must be present before you become a player in the real estate game.
There are many housing markets which you can invest in. Currently foreclosure and bank owned houses are in abundance and oftentimes can be bought significantly under market value. However, these types of distressed properties usually come with their fair share of headaches and challenges. Although there are close to three million vacant homes, very few are great deals.
The majority of foreclosure houses require considerable repair. Some have been sitting vacant for several years, leaving them exposed to vagrants and vandalism. Prior to investing in foreclosed or bank owned houses, invest in a professional inspection and conduct comparable market research. Real estate market analysis can be obtained online or through a Realtor.
The main objective in purchasing investment houses is to buy them significantly below market value. If you aren't able to purchase the home for 25- to 30-percent under value, it's probably best to pass on the property.
Investing in real estate owned (REO) houses is usually less risky than investing in foreclosure homes. When houses aren't sold through auction they are returned to the bank. Once the bank takes over ownership they negotiate to have creditor or tax liens removed, if applicable. Therefore, REO houses generally have a clean title and do not require as much work.
Oftentimes, the bank will make necessary repairs and prepare the house for sale. Other times, the properties are sold "as is". In order to obtain the best deal, you'll need to visit the properties and assess the advantages and disadvantages. Take along a notepad, digital or video camera and make note of structural damage, plumbing or electrical problems, and common problems such as broken windows, outdated appliances, flooring issues, etc.
Bank foreclosure houses usually have a higher price tag than foreclosure homes sold through auction. However, they are generally a better deal because you do not have to engage in the process of having liens removed, evict the previous homeowner, or invest time making repairs or hiring others to do the repairs for you.
Although investing in houses in the current market can be risky business, doing so can potentially net massive profits in the long-term. By investing now, you can take advantage of lower prices and interest rates. Additionally, you can choose from an abundance of distressed houses. If you decide to wait until the market turns upward, those deals might not be as sweet as they are today.
Only you can determine if investing in houses in today's shaky market is the best option for you. If you plan to invest in houses for rental property and cannot afford to make the mortgage payment without tenants, you're probably not in a position to invest at this time. However, if you're looking for a phenomenal deal for your primary residence or a pro at house-flipping, there couldn't be a better time to take the plunge.
