It is all over the news. The economy is not doing well. However, the government is giving their best to improve it. But despite all efforts, the economy still is in a bad shape because consumer spending continues to decrease.
One of the most affected sectors of the economy is the real estate market. Since the demand for buying properties is dropping, so is its market value. And because house prices are cheap, people think that it is a good time to buy investment properties. However, the real question lies on whether it is smart to invest on such property just because the prices are declining.
Investment properties are purchased and used for profit. One consideration in buying them is profitability. Getting one with a low price does not necessarily mean it can generate profits for you. You also have to think what activity you will be venturing on. Will it be selling or leasing? In addition, you have to consider what kind of investment Probate Realtor Marana AZ properties to buy and which among them is in demand.
To weigh things carefully, consider the facts on the next section.
Sell or Lease
You may have brought properties, rehabilitated it to increase its value and sell at a higher price. Although, they are more enticing because it comes with a good package, people would still prefer low-cost homes that could be obtained from pre-foreclosure, short sales and foreclosures. From there, they can practice their own buy and hold strategy. They can buy the house at a lower price and save much. Later on, when they have enough money, they can recondition it themselves.
In selling properties, you have good competition with cheaper offers. And that could become a priority, unless of course your house is perfect in everything including the price.
Leasing or renting may be quite advantageous these days. Since there are many people who have been victims of foreclosure, they ought to rent a home instead. Besides, they cannot get mortgage easily and some needs time to rebuild credit. This is great opportunity for them. In addition, renting will always be lucrative since there is influx of immigrants and people on job-hunt. These people travel from one place to another before finding their niche. Because there are many of them, there is a large market for leasing and renting.
The kind of Investment Property to purchase
You can get either a residential or a commercial property. Smart investment would also mean you have to determine which property has more market during these times.
Residential properties will always be needed. Although there is a decline in consumer spending, people will always find a way to have a home. It is a necessity and it doesn’t even matter whether it is owned or rented.
On the other hand, commercial properties like offices, warehouses and other retail properties have increasing vacancy rate. CBRE Econometric Advisors analyzed the market and they found out that office vacancy rate is 15.5 percent. National industrial vacancy rate is 13% and the retail vacancy rate is at 12%. This would clearly show there is low demand for these properties.
Seeing all these things, do you think it is the right time to buy investment properties? In terms of prices, yes it is. However, there are still other factors to consider. The mortgage, the interest rates, the marketability and assurance of cash flows.