If this was a perfect word, most of us would go back in time a two years to buy cheap properties, but since we can’t travel back in time we will have to settle for investing now or in the future. Even with prices rising in many parts of the country, I feel right now is still a great time to be investing in rental properties. I am making over 24% cash on cash return on my long term rentals in today’s market! I show exactly how I do it in my complete guide to purchasing long term rentals.
The biggest reason right now is such a great time to buy Real Estate, is the incredibly low interest rates that are available. With rates below 5%, available on most types of loans it makes it much easier to cash flow on rental properties. When I invest in long-term rentals, my main goal is cash flow. People have been investing in long-term rentals for a very long time with rates much higher than they are now. Even though rates have gone up recently, they are still well below the historical average.
We have seen an increase in prices over the last year across most parts of the country, but prices are still lower than they were at the peak of the housing bubble in most areas. With lower prices it is much easier to cash flow on a rental property, especially when you can finance with such low rates. If you buy below market like I do, then it is tough to lose money when you invest in Real Estate.
Rental properties are in demand
Rents are also going up or are staying stable in many markets. While banks have made it harder for investors to get loans, they have also made it harder for owner occupied buyers to get loans as well. Since it is becoming harder to obtain a loan, there are many more renters in the market than there have been.
There have also been a lot of people who lost their homes to foreclosure or sold them as a short sale. The people who lost their home, will not be able to buy for at least three years in most cases. They have become renters and need a place to live.
The housing bubble has scared a lot of potential buyers into continuing to rent instead of buy. Many people see prices going up and worry that means another bubble is coming. They continue to rent and will continue to need a place to live as well. All these factors mean there are a lot of renters in the market right now. In my market there is a shortage of rental properties and landlords are able to charge premium rents.
The sooner you start the better off you will be
What are you waiting for? The sooner you buy a rental property the sooner you will start receiving cash flow and paying down your loan. As with almost any investment, the sooner you get started the better off you will be later on. I wish I would have begun buying properties earlier than I did, as I would be in a much better position. As long as you are investing for cash flow, you can survive the down falls in the market. The longer you have cash flowing coming in, the more wealth you will create.