Real estate investments are tough at best times. How about the worst of the times. Is it possible to invest profitable in real estate when the market is as it is right now?
The real estate market is currently decaying. House prices fall, roof shutters, people living in their cars and houses selling for 1 dollar. I have looked at a lovely 4 bedroom home in Florida which is listed on eBay right now for a 1 starting bid.
Real estate investing success is based on a few simple parameters. Rising house prices and good rental yields. If an investor can secure a house that will increase in value over time and provide enough rental yields to close close to the cost of mortgage loans and other holding costs, then the investor will make a profit over time.
Preferably, the rent costs from tenants should exceed the cost of holding the property, and then it is in positive cash flow and the investor gives a return on investment, both from the income from the property and from the capital gain.
Its all pretty simple indeed. There are dozens of real estate investment seminars around, but thats the basics. If you buy a home for an investment, and the value of that home goes down over time, you will lose money.
If you make a loss of rental return over time, you will also lose money if you can not sell it home in the future at a price that is sufficiently higher than the purchase price to cover rental costs and get a little return on the capital.
Simple things. But difficult to achieve, even at best times. When the market is good, like it was a long time ago, you earned money if you are a good real estate investor. If you were good, you bought well and rented the property you were in front of.
No longer. The basic prerequisite for real estate investment is rising housing prices. If you have rising home prices, you have a good chance of doing well. Buy almost anything and you earn by default.
Now prices fall.
So right now there are no real estate investment opportunities right?
Wrong. There are good investment opportunities for real estate. But if you try to find them yourself, youre almost guaranteed to fail. There are some professional real estate investors now trying, and if you are a professional investor with significant investment in real estate investments you can do well. Or you can also do it badly.
But if you start investing in real estate now, youd better be out of the market. Unless......
Imagine a moment.
A solid American public company that has experience in real estate investment. Well capitalized with a proven proven strategy for investing in real estate regardless of market orientation.
The company invests in buying housing in demand. Not your McMansions currently on eBay, but the kind of houses that millions of working Americans live at right now, or need to live in. Basic features found in their millions across the United States.
With sufficient capital you can buy hundreds of homes at a time. From government, charities or any organization that owns a large number of homes in a single area. And because it can buy, it can buy on the way below market value. Hundreds of at a time bought in a suburb with all the right attributes including high demand for rental properties and, in some cases, a backlog of demand of up to 15 years.
Then they renovate these homes to a high standard. While it does, it spends money in the suburbs buildings parks and playgrounds and community facilities. And within a period of time a suburb has been completely transformed. New community attractions, high quality homes that people want to live in. Suddenly everyone wants to live there.
Up to 40 percent of the profits are plowed back to the local community.
Demand rises, people want to live there, both to rent and buy. The company has created its own profit, regardless of market orientation.
And so, it sells these properties to individual investors. No money down, loans are provided, the tenant has a rental guarantee. Immediate equity to the investor of approximately 15 percent. The investor owns the property and can hold it or sell it and retain 100 percent of the profit.
Now its successful real estate that invests in a bad market. But it takes experience, commitment to a community and for investors, and a solid background of real estate experience and a lot of capital.
Sounds too good to be true? Maybe it is not.