With rents on the rise and property values falling all the time, the real estate market is looking too good to pass up to many first-time investors who had been steering clear of the tumult. More than half of real estate professionals surveyed recently by ERA Real Estate are reporting an “increase in first-time investor activity in their markets”[1]. This is not surprising, says CEO of ERA Charlie Young, given that “all signs point to a strong rental market for the foreseeable future” thanks to a large majority of the population being affected by “foreclosure and credit situations,” unemployment and consumer confidence issues.
As these trends continue, real estate professionals are “actively courting” first-time investors in an effort to gain active, viable clients in a difficult market[2]. However, Young warns that not all real estate professionals are adequately prepared to advise new investors, and recommends selecting “a real estate professional with the ability to identify potential investment opportunities… [and] who is also well-versed in the drivers of the local rental market.” Not surprisingly, obtaining financing topped the list of deal-breakers for these new investors, with 42 percent reporting difficulty in this area. Another common mistake appears to be “submitting unrealistically low offers.”
All signs indicate that now is the time to own rental property. Are you getting involved in this aspect of the real estate market?
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[1] http://www.marketwatch.com/story/more-first-time-property-investors-in-the-market-2011-08-19?link=MW_latest_news
[2] http://www.sys-con.com/node/1949654
What a Las Vegas broker told me is those that had been renters during the run up in prices are now the buyers and those that bought are now becoming the renters. I work with one investor group that will purchase a home via short sale and rent it back to the previous owner with option to purchase in a few years. Other groups are buying the note and then writing a new note to the current owner.
This is one of the big myths of real estate investing, “Now is the best time to invest in Real Estate”. This is a business and there are risks that the first time investor may not be aware of. Investing in the right market at the right time creates wealth. Investing in real estate in the wrong market at the wrong time creates a second job or disaster.
I agree with Mr. Malinski 100%. Of course Realtors are always pumping up prices
because their commisions are higher when the sales prices are higher.
Of course there are plenty of idiots out there still willing to overpay for
properties. 2 years from now we will be buying those properties for 50 cents on the dollar.