The Wall Street Journal reports that people who may shun the stock market are looking at real estate investment. They think that now is the time to find that bargain. Of course, the type of people who are interviewed by the Journal are more likely to buy a summer home in the Hamptons rather than a 1 bedroom condo for full time living.
Down here in Florida, the real estate investment outlook appears to agree with the Journal’s observation. Home sales continue to rise for the fourth month in a row. Home sellers are holding more tightly to their asking prices, although there is always a little bit of yield. After all, buyers or investors need to feel they’ve gained some advantage in making the deal.
For those who are interested in real estate investment for long term income purposes, I recommend multi-family property. After all, everybody has to live someplace. Because multi-family property is sold based on a multiple of the rent collected, a real estate investor always has an intelligent way to measure the value of a property.
For the cash buyers who feel there’s still a chance to flip properties, real estate investment focuses on distressed single family homes and condominiums. While there’s no shortage of such properties available, the opportunity to purchase them at bargain basement prices seems to be diminishing.
This is because banks, who seem to be investor averse at the moment, are pricing low and waiting for bidding wars to erupt among the real estate investment community. Currently, they seem to be correct in their assumptions. Real estate investors scoop up these properties at prices above list because they still see sufficient profit margin in them.
After all, if a real estate investor can pick up a property for 55 cents on the dollar, fix it up for another 15 cents on the dollar and sell it to a first time buyer for 80-85 cents on the dollar, everybody is happy. The investor perceives this is a good profit margin, The first time homebuyer (or second home buyer) see this 15cents on the dollar saving as a bargain. The good news is that they’re both correct. And it is this kind of perception that starts to fuel real estate rebounds, albeit slowly.
Today’s real estate investment outlook is no different than it ever was, except that the amount and speed of gain is somewhat reduced. While real estate investors, or just plain old home buyers, always want to know they’re getting the best deal, the new breed of investors know that as long as they buy a property at what it’s truly worth in today’s market, they can’t lose too much. Because the market has already fallen about as far as it can go.
Marc Jablon, Realty Associates
marcjablon@yahoo.com 561 / 213-6139
www.MarcJablonHomes.com
Posted August 25th, 2009 by Armen Hareyan
