Thursday, July 2, 2015

Buy and Hold Coming to an End Soon

I’ve talked to several people lately about different real estate strategies to use and the one that has been the most popular among smart real estate investors has been the buy and hold. NOT THE FLIP. People flip homes when the market is moving at a pace that allows them to get a house quickly and turn it for a profit. But the investors that are absolutely cleaning up right now are the ones who are buying homes and holding them. Why is that?
First, the interest rates have been low enough for so long that if people have money to put down they can get these low rates on properties. A man I work with in Las Vegas has been buying up plenty of 100k houses and getting them rented while having extremely low payments on those houses. Why is this a good idea? Plainly, even if the interest rates go up in the area he is in a spot where renters will always be able to afford his payment and if the area goes up in value with the economy then he is sure to really increase the equity in each property. It’s a win across the board for him now.
Second, interest rates have started to go back up. When interest rates go back up something interesting will happen that the country isn’t prepared for at the moment. The housing values will have to stay still or even drop. I say this because the average person owns a 3 bed/2 bath house in our country and if they can’t afford an average payment at a 6% interest rate or higher then the market will have to adjust so they can. By getting these homes now at low rates you are setting yourself up for the best long term success because you can afford the payment at the low rate and it isn’t going to adjust on you like it did during the serious downswing we had a couple years ago.
Real estate is a great way to make long term wealth. Each day I deal with great owners of homes or apartments and they really see things for how they are when it comes to our market. I get great advice from them daily and I love to pass it on to you.

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