This article was originally published late 2013, but the premise is still valid today. While in many ways, we have seen the housing market recover – there are still opportunity for great deals. You just have to look a little harder for them. We are back to a more normal market. I do think we will see another dip in home prices after the election and I believe that there are still loans (primarily HELOCs) that will be resetting in 2016 through 2018. This will impact the default rate which has been more stable the past year.
A lot of the hedge funds have slowed down their purchasing which also has slowed the competition for foreclosures in our market. This translates to more deals for those investors looking to purchase that have cash to buy. However, you have to have an Agent who understands how to market for these types of properties to get the really good deals as the MLS no longer has the large amount of REOs that it once did.
The main thing to remember is you can invest in any market. You just have to be savvy enough to have a strategy and work it consistently. When we started in real estate in 2001 – everyone thought we were nuts. “You should flip in Atlanta” our investor friends would say. Glad we held true to buy & hold in the suburbs of Atlanta. We are still in business while a lot of our investor friends are not. The key to our success has been to buy them right. While some of our properties are still “under water” – they provide us cash flow, principle paydown, and depreciation. We will have to wait for appreciation for some. However, we also dollar cost averaged our rentals and overall our portfolio is solid. You have to begin somewhere. Get started with rental real estate today. If you are looking for turnkey solutions in Atlanta – we hope that you would consider us to help you.
Over the last few years, the only stories you heard about the housing market was the proclamations of doom and gloom and how there will never be any sort of measurable recovery for people who have found their houses underwater. Fortunately, those concerns seem to be melting away as the economy improves and people return to normal buying habits.
The best news about this new housing boom is that it’s driving investors to put money into new developments and rental properties. Savvy investors have noticed the high inventory and low prices and have begun a strategy of buy and hold, while renting out their newly purchased properties. In fact, many of these new home buyers are all cash-purchases making up nearly 32% of all home sales in March 2013. This is an incredibly recovery and rise since 2009’s dismal numbers.
Market conditions are most responsible for this sudden resurgence of investor money. The Federal Reserve has kept interest rates low, but banks have kept their lending standards very high, meaning that only the most qualified buyers can get money to put down on a house. The persistent unemployment has kept many prospective homeowners from having the kind of cash they need for the down payment or being able to take advantage of low interest rates.
This gives cash investors a huge edge in every housing purchase over other prospective homeowners. This influx of investor cash has contributed greatly to the sudden recovery of housing prices in markets like Las Vegas, Phoenix and Atlanta. This quick recovery in prices has made some houses that were easily affordable by many to rise out of their price range. This has led to new construction in these housing markets for the first time since the housing bust and recession began in 2007.
Investors are maintaining this buy and hold strategy on undervalued properties all over the United States, but especially in the harder hit markets mentioned above like Las Vegas, Atlanta and Phoenix. As the economy continues to gain in strength and recover, the housing prices in these markets will rise as demand for housing returns to 2005 levels. Investors are willing to take a slight loss for a few months to maintain the property until they can find a buyer that will pay the asking price.
While waiting for local property values to rise to the point where they feel comfortable selling, the rental market is heating up in these areas. While housing is still cheap for many, the persistently high unemployment and low wages have contributed to making it much more difficult for people to make that initial down payment. Instead, people are choosing to rent until they can scrape together enough money for their own house.
The rental market is still very strong for those who have the money to invest in new properties. The buy, hold and rent strategy allows you to build up your investment into something that you can make a passive income off of until you’re ready to sell. Savvy investors know that these market conditions won’t last long, so you’ll want to get in on the ground floor now.