Are Rental Properties a Good Way to Grow Your Wealth?
No matter which direction the market heads in the new year, demand for rental units is only likely to rise in 2019.
Some markets are continuing to stay strong others say their markets are already in correction territory and expect that to deepen in the next few years. Both could be problematic for flippers, spec builders carrying inventory and the luxury market that already provide lean yields. Why are investment homes the smart choice? If house prices keep on marching up, America’s affordability crisis is only going to intensify.
Nationally, the Out of Reach report published by Fast Company says you need to earn at least $22.50 an hour to afford an average 2-bedroom apartment in America. Most people would argue you need to make even more than the stated $22.50 an hour. With these high rents, it is almost impossible for most Americans to save a down payment to buy. Coupled with the rising interest
rates making the same homes even more expensive, fewer buyers will qualify for home loans. So, more people will have to rent, right when Generation Z is beginning to hit the market and are needing their own housing.
If people become fearful of homeownership, more will sell cheap to try and cash out any equity they have. Those who can’t sell fast enough may end up underwater. Housing affects the wider economy too. NAR states one job is created from every two home sales impacting the economy in many facets. So, what you have in a decline is fewer people who can and want to buy homes
and if they can’t buy, they have to rent. Many markets across the country are correcting. Should you invest in real estate now or wait? The market has been in a frenzy all across the county. However with rates now hovering above 5% many buyers have been caught off guard and are hesitant to pull the trigger. Some areas are continuing to see a steady tick upwards with no sign
of slowing down. So what should you do? Are we going to continue to rise or will the market crash like in 2005? Unfortunately I can not guarantee our market wont tailspin, but I can say there are none of the economic indicators we saw in 2009. According to the experts we would need to see the conditions that would indicate we were headed towards a recession. Primary
conditions would be; 1. Rampant unemployment 2. Rapid spike in interest rates 3. War or other such global conditions. If this were to happen many asset classes would suffer. Would you feel more comfortable parking your money in Bitcoin or the stock market? Are any of those asset classes guaranteed?
What is the solution? Buy now or later? Wait for a market correction or focus on the markettoday? Are you interested in learning how decipher if now is the time to buy? Check back for Part 2 ...