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August 11th, 2011 10:04 AM by David W. Welch
This is not a how to, but a note on why investing in real estate could be a very good move right now. It is always important to know what is going on in your local market before investing. Here are some considerations for each investor to evaluate.
First, real estate is real property. Gold has long been a haven for investors looking to put their money into something real. What I find interesting though, is that they rarely hold the actual gold they have purchased. If you purchase real estate, you can go touch it any time you like, and nothing is more "real" than real estate. Second, real estate prices are ridiculously cheap. This of course varies by market, but here in Orlando prices are off their peak by about 60%. It is all about supply and demand, and Orlando had a huge supply of homes due to overbuilding and a rash of condo conversions back in 2004-2006. By 2008 there were 26,000 re-sales on the market and another 24,000 new homes sitting empty. Today there are fewer than 10,000 homes available for sale. We have dropped from about a four year supply to a four month supply. Third, interest rates really cannot stay this low forever. Low rates and the availability to leverage your investment have made the cost of ownership considerably lower than rent. Check you local market, but Orlando rents are about a third more expensive than purchasing. This means investors are getting good returns.
Finally, if you don't believe me look at what other investors are doing. Cash purchases in Orlando have been accounting for more than 50% of the sales this year. They made up nearly that much last year, and the bulk of these cash sales I believe are being made by investors. Actions speak much louder than words so just follow the money. I don't know of any other investment that allows so much leverage paid for by someone else, offers depreciation allowances to reduce taxes, and historically offers a hedge against inflation.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone