Buy And Hold Real Estate Investing Part Ii

By Author: Zack Wiest
Total Articles: 8
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It may be time to take a good hard look at the Real estate market and decide on our own.

With all the negativity surrounding the market over the last few years let’s take a look at what really matters. Most investors are looking at property values as the only criteria as when to buy and what to buy.

This is a major factor in deciding when to enter the market but a closer look shows that it should not be the only criteria. Trying to guess the bottom of real estate values could leave you with out the best deal. With mortgage rate at a 35 year low this can work to our advantage. Most experts think that we have seen worst in real estate values. What should be expected is some ticks down but that the sharp declines and drastic hits for the most part are behind us.

Now let's take a look at how values and rate affect us.

When thinking about building a rental portfolio the number 1 thing to keep in mind is "CASH FLOW" Popular opinion is the cheaper the better. Consider this, not the cheaper the property rather the cheaper the payment. This is where the terms of the loan come into play. In many situations ...
... the terms are going to create a better deal.

Follow the example below:

A rental house that cost $100,000
$100,000 @ 5% = $537. A 5% decrease in property values with a 1 percent increase in interest rates proves to be a bad deal.
$95,000 @ 6% = $570.

A 6% or $33 difference in payments.

There would have to be a decrease in property value of greater than 10.5% for the payments to be the same.

So the questions remain: Is it time to buy? Are we at the true bottom (rates & values)? If I wait for property values drop will I miss the bottom of the interest rates?

With values at an over corrected state, rates at a 35 year low and inventory starting to decline now may be the best time to buy.

Zack Wiest is owner of PA Deals, LLC. They are a residential real estate investment firm located in Harrisburg, PA. Though founded in 2006, the principals of the company have been investing in real estate since the year 2000. You can find out more about us at http://budurl.com/padealsbmpart