Investing in multifamily
Lower Phoenix Prices Mean More Real Estate Investments Make Sense
With the readjustment of home prices to more affordable levels and steady rental rates real estate investing is making more sense as an investments rather then speculation.
Real estate IS a good investment when made prudently. It is a good investment when made for the right reason. You can make money in real estate with speculation but with speculation comes risk and that is something many of us are averse to and it really does not make sense for most people.
Take a look at the annual appreciation rates by city in Greater Phoenix since 2001 . This is a short period of time but it’s not a one year or a few month hold. Despite the carnage out there if you purchased in 2001 your appreciation rate is still rather good. If you purchased even earlier it’s good.
On average in Greater Phoenix it’s been about 5% over the last few decades. I won’t say it will be that but: it may be negative for a year or two more and it may be flat after that but at some point normal inflationary pressures will resume and even if you get 3% it’s good when you’re leveraged, that of course is in addition to cash flow which will increase your real return and cumulative wealth.
We are seeing prices at 40% to 50% below peak -which was an excess- in some places and often prices below current normal market trends. These are mostly outlying cities and neighborhoods but these are often newer communities that are very attractive to residents and tenants in common. This drop in pricing has occurred while rental rates are stable: it is easy for a landlord to find homes that will "cash flow".
And it is these magic two words "cash flow" that makes real estate such a wonderful wealth building product.
A $110,000 home can rent for $950 competitively: That means that with a normal down payment that property will cash flow and provide a decent return for the investor. This is not an anomaly it’s quite normal now.
Investors still need to pick investment homes using certain criteria which will better their re-saleability in the future.
Would you like to see examples of such homes? Contact us and we’ll send over a selection of homes that can make good rental investments that will cash flow. Sometimes these may need as little as a few thousand dollars in repairs but sometimes a bit more: on average $5,000 will do wonders. Put a good home together with a competitive rental rate and you’ll be more likely to attract good tenants for the long term and built wealth with little risk.
original post at PMT
Incoming search terms:
- cash flow investments leave comment
- does it make sense to invest in Phoenix
Apartment Investments Forcast To Do Well In The Coming Years.
Commercial Property News reports, in an article titled Investors Lured to Apartment Buildings, that, "…over the long term, apartments could become an appealing investment as new apartment development becomes scarcer."
In recent weeks the commercial lending market just blew up. There is little if any money out the for big projects. Apartment development will be down for the coming years and it usually takes a while for projects to wind up before coming on the market.
Most of this relates to larger apartment communities but the benefits will be felt by owners of small multifamily properties as well. Less stock means means less competition all around for tenant.
The article also notes:
A growing demand with out a rapidly increasing supply is good for owners.
Though the market is weak and rentals are flat at this point in the Phoenix market, a good stock of apartment on the market provide investors with properties at low prices.
Even without the prospect of equity growth properties in the market can be purchased with cash flow so appreciation will be an additional benefit.
Real Estate Investment Articles From Phoenix Market Trends
Some find it odd that we post real estate investment articles at both Phoenix Market Trends and Arizona Apartment Investor. There is a reason for our madness. Phoenix Market Trends focuses on mostly owner occupied home owners or would be owners. While sometimes we have investment articles but, they are related to condos or single family homes.
At Arizona Apartment Investor we focus on multifamily properties, managing them, analyzing and so on. This might turn off some readers who just want to find a nice home in Central Phoenix to live in so we have a separate blogsite, namely Arizona Apartment Investor. None the less some articles are cross posted and some are referenced. In this case we have two articles which also have relevance to multifamily investors.
1. Using Your Self Directed IRA To Invest In Real Estate.
2. Six Reasons To Buy Real Estate Against The Crowd.
Incoming search terms:
- investing in phoenix
- phoenix market trends in property management
- phoenix vacancy rates 2012
