Renters welcome: But they won’t cover your mortgage
Within the current market conditions I come across a number of wanna be property investors. They attend and buy foreclosure seminar products with the old sales pitch of buying low and flipping at a new market value. What these wanna be’s don’t realize is the people selling these products are disconnected with today’s market. They are disconnected from what the lenders are accepting. They don’t realize that all of the major lenders own massive local residential portfolios and it’s these portfolios that are setting the new market values. The idea that you can buy low and sell at a higher market value is gone for the time being. The local South Florida Real Estate market is declining at the same rate it appreciated through the boom. The professional property investor is looking at the annual return of the down payment on an investment. Take for example $10,000 of capital can produce minimal returns in an environment with falling interest rates and a rocky equity market. So the idea is to out perform the annual return the $10,000 would produce in other markets. The clear cut answer is income producing properties. Now that property values are declining income producing properties make sense on operating sheets. If structured properly one can produce 20-30% annually on the out of pocket costs to take control of an investment property. Rents make sense in these tough market conditions. Buy and hold and produce positive cash flow over the current economic and real estate down turn. This article in the Palm Beach Post further explains the current local South Florida market conditions. (more…)
