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Is there such a thing as the right time to invest in real estate, and if so, when is the best time? The answer is yes, there absolutely is a right time to invest in the real estate market. Luckily for investors, that time is right now! What makes 2019 a great time to buy a home? Learn more about why right now is the best time to jump into the real estate investment industry.
READ MORE: How Much Capital Do You Need to Invest in Real Estate?
Because interest rates are so affordable, many buyers and sellers are choosing to take advantage of the current state of the real estate market to move to new locations or to purchase a newer, larger home. This is great news for investors seeking affordable starter homes and properties that are in ideal neighborhoods with the right amount of space for renters.
High interest rates are an investor’s worst nightmare, but low interest rates mean less money owed upfront (if you’re paying in cash), less money owed over the course of the loan (if you’re financing), and ultimately, less money owed each month. This means market rental rates are stable, but your required payments are lower, meaning you can charge the same amount of rent and effectively make a larger profit. Many investors purchase as many turnkey investment properties as possible while interest rates are low, since a fixed interest rate will stay with your property throughout the course of your loan.
A fixed interest rate is one that is just that-fixed in place. This means your interest rate will not become higher or lower over the course of your loan. A variable interest rate, on the other hand, is dependent on the real estate market and can go up or down in a very short time. This means your monthly payment may change from month to month.
For investors who can put large amounts of money down and seek short-term loans to cover the rest of the mortgage payments, say less than 5 years, a variable interest rate can work in your favor, especially if the market is favorable for investors. If, however, you choose a 30-year mortgage or one that will last more than a handful of years, a fixed interest rate will protect you from the fallout a housing crisis or economic recession can cause.
Because home values are rising, even the value of starter homes and small rental properties is increasing. This is great for investors who want to be able to make a profit on the sale of rental properties in the next few years as well as for those who plan to keep their properties for an extended amount of time.
Either way, now is a great time to consider selling any investment properties you no longer wish to keep and investing in new properties. We recommend investing in turnkey rental properties which require little to no renovations or remodels on the front end, so you can begin generating passive income as soon as you purchase a property.
TURNKEY RENTAL PROPERTIES FOR SALE →
As home values rise, home prices are also rising. This makes now an opportune time to purchase a real estate investment property for a couple of reasons. Number one, you can charge higher rent, which is a win-win for you no matter which way you slice it.
Number two, home prices are rising incrementally each year by as much as 3.5%, so waiting just one year to purchase a $100,000 rental property can be the difference between a price tag of $100,000 and $103,250. If you’re willing and able to invest in real estate now, don’t wait to do so. It will only cost you more money.
RENTAL PROPERTIES FOR SALE →
One of the easiest ways for investors to save money on rental properties is to choose locations which don’t require a lot of labor and renovations on the front end. Turnkey rental properties, for example, don’t require major electrical, plumbing, or HVAC repairs or renos, so you can begin searching for renters as soon as the home is in your name.
As if you needed any more reason to be motivated to purchase a real estate investment property now, here’s another. Apartment rent is increasing substantially each year. Even renters who have been living in the same location for years are being expected to pay as much as $100 more per month for the same amount of square feet in the same location. This is great news for investors, because as apartment prices rise, more renters are considering rental homes as an alternative to apartments.
Use rising apartment costs to your advantage and market to apartment dwellers who may want to consider a rental home. Rental homes offer a variety of amenities they won’t find in an apartment, including:
✓ Outdoor space for pets, kids, grilling, and entertaining
✓ A trash can they don’t have to drive to
✓ The ability to choose their own wireless internet provider
✓ More privacy and security
✓ More convenient parking
Many renters are also looking for neighborhoods in cities with great public schools, a variety of family-friendly amenities like parks and libraries, and the opportunity to feel more “at home.” The ideal renter will value the ability to choose a home over an apartment, and in Memphis, more than a quarter of residents are currently renting. Don’t waste any time purchasing your rental property if you want to start making passive income.