In today's market, there is a lot of uncertainty. Many people are afraid to invest in real estate because they don't know if the market will crash again. They don't want to risk their money on something that could go down in value. This fear has caused many people to sit by idly while others reap the benefits of investing in real estate.
Most investors choose to invest in real estate because it consistently produces positive cash flow without having to manage employees and inventory - and that's why now is a good time to get involved in the industry. Income-producing real estate can provide passive income even when you're not there physically. The people who are able to take advantage of this opportunity are typically successful entrepreneurs who want more independence and control over their future financial security.
Still thinking about whether or not you should invest? It might be best for you to look at these facts:
- Interest rates are low
- Fewer families can qualify for mortgages due to strict regulations and higher down payment requirements
- Banks have reduced mortgage lending standards
- Tax breaks are available through the Government (homebuyers credit)
- Homeownership is at an all-time low (64.9%) and has been for the past 4 years
- Fewer first-time buyers
- Rising unemployment rates all over the country
This is a great time to buy, but don't wait too long. The longer you wait, the more money you will lose out on!
Let's take a closer look at these facts:
Low Interest Rates
Interest rates have been low for the last several decades. In fact, they are at a 51 year low right now! As these interest rates continue to decline, there will be less incentive for people to save money rather than spend it. This represents an opportunity for real estate investors who can use their money and utilize it while the interest rates are still low.
In order to buy real estate now, you need to act quickly. If you wait too long, interest rates could go up due to economic recovery or another recession. Currently, there is fear in the market which is causing people not to spend any extra money they might have which would cause demand and lower prices if more inventory was on the market (also called deflation) but because there is little to no demand, prices are staying high.
This isn't the best time to buy real estate on a short term basis (to sell it in three months or less) because if you need to liquidate quickly, it will be harder to find buyers. Prices can drop suddenly and that means you might not get as much profit from your investment as you would want. So if you're looking for a quick profit, then perhaps now is not the best time for you to invest in real estate. But if you are interested in long-term investing and planning out how many years (even decades) it could take before selling, then this is the perfect time!
Reduced Mortgage Lending Standards
Low interest rates are not the only thing that makes now a great time to invest in real estate. Banks have also reduced mortgage lending standards which means you can qualify for a loan easier than before. This is because they have become stricter with their regulations about minimum down payment requirements and minimum credit scores. This has limited many families from being able to buy homes, but now with the new lax lending standards, there is more opportunity for people to buy than before.
Tax Breaks To Encourage Homeownership
In recent years, homeownership rates have been at an all-time low for the past several years. This is largely due to the fact that many factors are in play including:
- high unemployment rates
- high foreclosure rates
- high inflation
- high interest rates
- low housing prices.
So in order to encourage homeownership, the government has introduced new tax breaks for buyers. This makes buying a home much cheaper since you can deduct more costs from your taxes (including mortgage interest). So if you make money off of your investment by renting it out, there is incentive for you to buy because not only will you profit from the rental income but also from the tax breaks that come with being a homeowner.
In fact, it’s safe to say that this is probably one of the most important factors in making real estate investing so profitable right now: tax benefits! Why? Because unlike others such as investing in the stock market, you have to pay taxes on your profits (capital gains). This means that there are extra costs involved if you want to become a landlord which can make it unprofitable. However, with these new tax breaks, many of those extra costs associated with owning and renting out property are now eliminated such as mortgage interest, utilities, and property taxes.
Homeownership is at an All-Time Low
rental property. So if you're interested in becoming a landlord, then now is definitely the best time to start!
Rising Unemployment Rates