Real estate has always been known as a great investment—whether for your primary residence or as income property. Of course, the recent recessions and rushes of foreclosures have left more than one property owner wondering if that would still be true going forward! But in fact, now may be one of the best times to consider jumping back into the housing market, especially if you’re looking for income-producing investments with a fairly low amount of risk.
There are many reasons
property ownership can pay off. Here are just a few of them:
1. Long-Term Returns
Yes, the real estate markets have been a bit scary lately. If you’ve been upside-down in your mortgage, come close to losing your home, or had to scale down and sell at a loss, you could be feeling less than bubbling optimism about the wisdom of owning property again. However, when it comes to real estate (as with any major investment), the key is in being willing to see a big picture…as in years to recoup an investment, rather than weeks or months.
Despite recent setbacks, real estate is still a great back-end investment vehicle: looking back even as few as 30 years shows that real estate is still valued much higher now than it was then. And—while nothing’s turning around at lightning speed—the economy has at least mildly rebounded, banks are becoming more creative, and there’s more real estate available for purchase than ever before. If you’re patient and willing to take a long view, this is a great time to throw your owner-hat in the ring.
2. Mortgage Offsets
While no one relishes profiting off another’s misfortune, the fact also remains that a rash of foreclosures such as we’ve seen of late results in an influx of folks looking to rent while they get back on sound financial footing. Also, keep in mind that by and large, people who’ve been in houses prefer to rent another house rather than an apartment; there can be a perception that moving to an apartment is taking a step backward rather than forward.
So if you’ve always thought income property would be an excellent way to build yourself a nest egg, these people can soon be your best friends. Not only will their rent checks help offset your mortgage, tax, and insurance payments; former homeowners also tend to treat rental properties as if the homes are their own, which usually means they treat your property better than a renter who’s used to apartments alone.
3. Relocation Bargains
If you’re flexible about your chosen location, you might be amazed what the same dollar will buy from one place to another. At present, real estate bargains can be had in Arizona, Florida, California, Michigan, and Nevada—in most cases, with no sacrifice of amenities, lifestyle, or cultural opportunities. Even if your state’s among the pricier locales, there’s a world of difference (literally) between what a given price will buy in a city center versus the “bang for your buck” you’ll get in the suburbs or a few miles further down the road, in a rural setting.
It’s important to note that lower housing costs can go hand in hand with lower pay rates—something to consider before you leave behind “golden handcuffs” in a high-powered career. But if you’re also looking to simplify, scale down, or slow the pace of your life to stop and smell more roses, relocating can be the closest thing to a perfect decision you can make. With housing being by far most people’s largest living expense, any savings you reap on that side of the ledger gives you options you might not have otherwise: an early retirement, travel, or helping loved ones. Even one of those, all by itself, might prove to be more than enough reason to give yourself a change of scenery…while keeping more “change” in your pocket.
Taking the Profitable Plunge
Whatever reasons property ownership appeals to you—whether you need a new home for your growing family or want to begin generating income from rentals—right now is a great time to gather information, research the possibilities, and take the plunge into real estate. Years from now, it’ll still be an investment that keeps on giving.
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