The 1.2 million member National Association of Realtors released their June pending sales report on August 4th, 2009. For the fifth consecutive month, pending sales increased significantly and were substantially higher than year over year sales. In fact, June 2009 sales were 6.7% higher than in June 2008. June pending sales rose 3.6% over May sales. The last time there were five consecutive monthly gains was in July 2003.
The bottom line is that residential real estate is selling. The current market features low mortgage rates, depressed pricing and the availability of the $8000 tax credit for first homebuyers.
For the past several months, the FHA has been reviewing their appraisal policies. A recent ruling requiring participation of local appraisers has helped to quell some unrest among investors.
The NAR maintains a Housing Affordability Index. The index tracks important criteria and is a reflection of the overall buying climate. The June affordability index stood at 159.2. While down a bit from recent months, the index is 36.6 points more favorable than a year ago. The slight rise in the interest rate from record lows still makes it a desirable marketplace.
The affordability index is so favorable that a median-income family earning $60,000 per year can now afford a home costing $289,000, well above the average selling price in June.
The Pending Home Sales Index is a leading indicator representing about 20% of transactions for existing home sales. The index is based upon activity from the year 2001. June 2009 is 59.2% ahead of the 2001 pending sales.
Many of these pending transactions are investment sales, short sales or foreclosure sales. These areas are providing strong buying opportunities for investors. Today’s real estate market is loaded with opportunity. Experienced investors are getting pre-qualified and playing that chip to strengthen their position. If there was ever a buyer’s market, this is it.
Fixer uppers, sometimes known as rehabs and junkers, are common investments in today’s real estate market.If you are wondering why they are such popular investments, there are several reasons.First of all, there is a serious abundance, and I mean a huge abundance of distressed homes in today’s market and they are selling for pennies on the dollar.Secondly, with the economy being so poor, the bottom line is that cheaper homes are easier to buy.People are in need of low cost homes, and this makes fixer uppers and rehabs an easy sell.But buyer beware, this doesn’t mean that all fixer uppers are a wise investment.
First of all, the vast majority of fixer uppers are located in low income, economically distressed areas of town.Most of these homes have a much higher investment risk simply because they are in less than ideal neighborhoods, and they do not appreciate in value.If you are a newbie investor, you may be wise to at least stay out of the worst areas of town.The reason for this is because as a newbie investor you don’t really know a good deal when you see one and overpaying for a junker will sink you!
Keep in mind that it is a buyer’s market and you can demand your terms and prices.If you cannot negotiate the price or terms you want, it is best to walk away.For example, if you find an owner willing to owner finance the property for you; it would be in your best interest to try to negotiate an interest free purchase.With so many distressed homes on the market, you should NEVER settle for poor terms when you can easily find what you want elsewhere.If the seller wants to get rid of their property badly enough, they will meet your terms!
In today’s society, everything is about making a quick buck.In most business ventures, it’s the convenience and security of being your own boss, along with the promise of “easy money” that push people into action.However, if you are considering starting a real estate investing career, you should know that it is definitely not a “get rich quick scheme.”It takes hard work, finesse and determination.But don’t dismay, that doesn’t mean that there is not easy money to be made, because there most definitely is.Just don’t go into it thinking that your million dollar deal is going to somehow come knocking on your door!
Perhaps the easiest way to make money in real estate is through appreciation.I know that sounds boring, but if you have time to ride out the market ups and downs, and make smart real estate purchases in the process, you are bound to come out on top.This method is not quick, but it is definitely easy.
The real estate cliché is definitely true-you make money in real estate when you buy.Knowing when and where to buy a property should be of the utmost importance to you as a real estate investor.Lower income properties are not always good buys unless you get them at a mere fraction…and I do mean fraction of what they are worth.In fact, you can often times come out further ahead by securing a decent deal in an excellent area because the appreciation of the property will be far greater than a quick sale on a rehab.
Lastly, making money through rentals is easy money.The key to making money with rental properties is that you have to keep them long enough to see debts fall off and rental rates rise.If you have owned a property long enough, you will owe a fraction of what is being paid in rent and that makes for very easy money!
