OK, so I’ve been pretty silent from posting most of this year. This shouldn’t be too surprising to those who read my posts, as you also know I felt that refraining from buying in the current residential real estate market was also prudent.
If you do a quick perusal of my previous blogs, you know that I had felt strongly that the market was headed down… which happened. You know I also warned early this year of over financing, which has also been a bane to those who didn’t listen and decided that buying property as long as they could get financing would should always work. Guess what? It doesn’t.
In fact, foreclosures, nationally are way up! I live in New Jersey and I heard today (unconfirmed) that we lead the Northeast in the number of foreclosures, up a whopping 60+ percent from a year ago.
So, what does all this mean? Well, of course I can’t predict the future and this is just one humble man’s opinion, but here are my thoughts. Take them with a grain of salt and do you own research:
- First, I think the market is more realistic today than last year this time and certainly two to three years ago. Asking prices of single and multi-family homes seem lower to me than last year. Hint: that’s good for us buyers!
- We can’t predict interest rates, but I think they will not be a significant change in mortgage rates over the short-to-intermediate term, which should help stabilize prices and prevent a huge housing crash nationally… although you could still see mild-to-moderate deflating prices in various areas.
- Now is the time to start aggressively ALMOST purchasing rental properties. What the heck do I mean by that? Start looking. Have patience. Look for good deals. For now, buy cautiously, if at all. I think over the next year to 18 months some pretty good deals will pop-up from people who hate landlording and got into it for the wrong reasons; sellers who have been in the business for a long time and are retiring; properties kids inherited from their “landlord” parents; foreclosures from investors who got stuck in over their heads with intricate financing issues like interest only loans and adjustable rate mortgages that are now at much higher rates than when they first bought their properties.
- Evaluate every deal as if it is a separate business that you want to make a profit owning. Don’t buy just because prices are “relatively” cheaper than they were last month. Know your expected income and expenses. Buy the Way Smart Landlords Do It.
- Be careful of trying to flip properties in a falling market. You may find your margins squeezed.
All of this could mean some great buying opportunities shortly for smart investors who are interested in building or growing their rental property business. If you are looking to learn a simple, effective way to evaluate rental properties and build a rental property business, then I think you will find my book “How to Buy Your First Rental Property and Beyond” an excellent, step-by-step plan to help get you there.
Warmest Regards,
Steven Boorstein, Rental Property Owner/Landlord