One of our blog readers submitted the following question:
“I have a home that was appraised at $130,000 this month. However, I think it's worth at least $200,000. Would you agree to keep it until the market comes back up and try to sell then? My ex-husband will rent it from me until then. Thanks, Bev”
Well Bev, there are several things to consider: [Read more…]
The cash-on-cash return of an investment property is a measurement of its cash flow divided by the amount of capital you initially invested. This is usually calculated on the before tax cash flow, and is typically expressed as a percentage.
Cash-on-cash returns are most accurate when calculated on the first year's expected cash flow. It becomes less accurate and less useful when used on future years because this calculation does not take into account the time-value of money (the principle that your money today will be worth less in the future). [Read more…]
Most experts agree that the days of flipping properties are over. With weak demand, slow sales and high inventory in most US markets, the question real estate investors are asking is, “Where do I invest now?”
As always, there are markets around the country where homes are affordable, the underlying economy is strong, and appreciation is imminent. These are the markets you should consider looking at for your next long-term real estate investment. [Read more…]
Is the housing crisis over?
The Wall Street Journal published an interesting opinion article on May 6, 2008 titled “The Housing Crisis Is Over”. Here's the link: http://online.wsj.com/article/SB121003604494869449.html
Although our business has seen a small upward tick in sales activity over the last four weeks, it's hard to believe the crisis is over. (For those of you who don’t know, our company markets real estate investment opportunities to investors nationwide).
There are still a very large number of adjustable rate mortgages that were originated three years ago that are set to reset this year. These will likely increase the pace and number of foreclosures throughout 2008 and into early 2009, and those problems will extend into other areas of the mortgage industry. All of which will keep lending guidelines very tight this year.
It could be argued that the housing market is dragging along the bottom, but the fact of the matter is that lenders are still pulling back on their lending programs and that doesn’t help to sell houses in order to absorb existing inventory and help stimulate the housing market.
The large number of expert opinions and reports predict the national housing crisis to end somewhere between 2009 and 2011. What’s your opinion?
We are currently experiencing the worst real estate recession this country has seen in decades. Property prices in some areas have fallen to the point where many people are paying more on a mortgage than their property is actually worth! In fact housing prices dropped at the fastest rate ever in February indicating that the housing slump is probably gaining momentum. The Standard & Poor’s/Case-Shiller home price index of 20 major cities fell by 12.7% in February versus last year, the largest decline since its inception in 2001. Seventeen of the 20 metro areas reported record annual declines.
Many builders and developers around the country have gone bankrupt, even the large ones that recently appeared financially solid. There are hundreds of developments scattered around the United States that have been left unfinished. And there are thousands of new construction homes that are either in the process of construction or have never been occupied. [Read more…]