how do investors invest in residential real estate now that the housing market keeps going down? im in california where prices keep dropping
2007-02-22 17:26:27 · 3 answers · asked by RFJ 3 in Business & Finance ➔ Renting & Real Estate
Serious real estate investors make money no matter what the market is doing. In some regards, it is going to depend on what your strategy is. Is it cash flow? Wealth building over a longer period?
I believe there is a great opportunity in both right now in California. In many cases, there is a tremendous gap between what rents/leases of single family homes go for and what a mortgage payment would be. If you can sandwich yourself by leasing off of person "A" with an option to buy at a specific price within 3 years and then do a rent to own with someone (person "B") who wants to own a home, but can't for whatever reason right now, person B is probably willing to be closer to what a mortgage payment might be.
For example, you lease my house off of me for $1,200 @ month and have the option to buy it for $250,000 within 3 years. You then lease it out to someone for $1,500 @ month and they can buy it at $299,000 within 18 months. In many cases, you can even get an option payment up front that will give them that right to buy. That can be very lucrative.
On the other hand, even though prices are falling, they probably aren't falling in every neighborhood around you. If you are thinking long term, the price falling won't make that much difference in the long run if you have someone who can make your mortgage payment. You will be reducing your debt and eventually prices will go up. Maybe not as fast as the last few years, but historically at a 2-3% @ year average. You will be ok in the long run if you are interested in building wealth.
Hope that helps
2007-02-22 22:40:15 · answer #1 · answered by ga_rei_guy 3 · 0⤊ 0⤋
There are a few places left in California (like north LA County Areas and Bakersfield) that are still affordable. And it is a buyer's market right now. Prices are dropping, but rent isn't going down. So you still can't go wrong in investing here in California.
2007-02-23 01:34:06 · answer #2 · answered by Ana D 3 · 0⤊ 0⤋
Invest in a different state. (Ca. res living in Canada) Cali is in a state of decline and WAY over priced. The market correction has only begun. My buddy in Arizona is cleaning up BIG time in the buy-sell in lots. California is a done market.
2007-02-23 01:35:24 · answer #3 · answered by ROD'R 2 · 0⤊ 0⤋