Half a decade after the real estate bust, the single-family housing market is still rather weak with prices falling a little over 3 percent across the nation when compared to a year ago.
The quick property flip for profit is a thing of the past. Some believe that the quick buck housing flip contributated to the bubble bursting. However, those investing in apartment buildings are getting better deals now than at any time in the past ten years. Benefits of doing so are seen when you figure that mortgage rates are extremely low and the prices of homes are falling; while, at the same time apartment rents are almost as high as they have ever been.
Around the country, the average rent is about $990, up 7% from 2006, and estimates seeing the rising to about $1,020 by 2012. This is the result, in part, that demand is high due to fewer units as the national vacancy rate has dropped 2% from last year.
Uneasiness caused by the housing market crash and an unstable job market, has made many potential home buyers hesitant to do so, increaseing rental demand.
Nearly three million homes were foreclosed hon in 2008, and another five million are expected to face the same fate by the end of 2012. This reality will find former homeowners having to reestablish credit and paying rent for over five years to do so.
These factors combined have a spurred a bill market where investors are reaping the benefits, and revenue, of landing properties that generate enough rent to cover the costs of operation.
The biggest returns in property investments occur when the mortgage is completely paid. An investor with a fifteen year mortgage can be looking at income being generated just in time to aid in retirement or even a child’s college tuition.
A real estate investment trust (REIT) is a means by which an investor can take on an income producing property without doing any of the dirty work. REIT’s generate income mostly from rent paid by tenants, and income is passed along to shareholders via dividends.
Although many options exist, the most favorable is the buying of a property outright. This calls for a mortgage and a down payment of up ot 30 percent in cash. As capital appreciates, return on investment is greatly amplified.
Tax Benefits of Homeownership
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