Why Now is the Perfect Time to Invest in Real Estate [2022]

The real estate market has been booming in the past few years. Real estate investment is a financial strategy that deals with the ownership, management, rental, and/or sale of a property intending to make a profit. Over the years, real estate has proved to be a lucrative investment, offering both profit/income in terms of appreciation when sold or rented. It is still regarded as one of the oldest and longest-standing investment forms. But is now a good time to invest in real estate?

Many people are worried that the market will soon crash and prices will drop significantly. However, some experts say it is not a good idea to wait for prices to go down because it may never happen. You should understand that land is one factor of production that hardly decreases in value. Compared to the stock market, the real estate market does not experience devaluation often. The best time to invest in real estate is now because the price may never come down again.

The best time to invest in property is when you have the money, but there are no clear signs of an economic downturn.

Below are six reasons why now is the perfect time to invest in real estate.

Six main reasons why now is the perfect time to invest in real estate

First Reason – Home Values are Rising Across the Country

The closely watched S&P CoreLogic Case-Shiller Indices stated that the prices of homes across the nation skyrocketed 19.7% in May annually, rising from 20.4% one month earlier. In March, respectively, home prices surged at the highest rate in 35 years.

According to experts, the prices aren’t going down any time soon. So if you have the money, do invest now. Also, the increasing rate of inflation isn’t happening ammeters. The more inflation rises, the more you have to pay for real estate investment, and real estate investment is one of the best ways to beat the wave of inflation encroaching on the country.

Second Reason – Low Inventory of Homes for Sale Suggests Prices Aren’t Heading Down Anytime Soon

The National Association of Realtors (NAR) stated that the median sales price of existing homes spiked to a record high of $416,000 in June, which is 13.4% from a year ago. All these indices indicate the prices of existing homes aren’t cooling down anytime soon, and the sales of existing homes have declined.

The high mortgage rates and inflation have resulted in increased home prices, gradually fading off housing affordability. Zillow stated that the typical monthly mortgage payment is 75% higher than in June 2019. Worst still, inflation isn’t doing justice to earnings.

Also, the MBA economists stated that home prices aren’t falling short any time soon. The MBA reported that the median sales price of an existing home at $361,400 in the first quarter is expected to go up higher to $402,000 in the second quarter and slightly cool off at $379,000 in the third quarter.

Since we are approaching the third quarter of the year, it is advised to invest in real estate now.

Fourth Reason – Rental Properties Can Help Generate Income Today and Provide an Investment Opportunity Tomorrow

One of the ways to achieve a regular inflow of money in real estate is by placing the properties or homes on rental. You will surely have a steady income when your property is on rental. So this can help generate money for you monthly. This is a great retirement plan for those that won’t be physically fit to engage in jobs to earn monthly salaries. You can also decide to sell it after many years of renting it out and still earns from the appreciation. Also, you can get an opportunity to lease the property out to a firm or organisation tomorrow. So anywhere, you aren’t losing your investment.

Fifth Reason – It is predicted that more jobs will be available in the future, creating more demand for housing and higher prices.

AL and robotics are opening up the scale for more jobs to come into the market. It is predicted that more jobs will be created, especially in the IT, Engineering, Science and AI sectors. These companies will look for land or housing to buy to use as companies. And then, the cost of housing will be higher. So you can see that real estate is a wise investment to cash out on the increasing job opportunities in the future.

Sixth Reason – You can get a mortgage with just 5% down, which means you’ll have 95% of your money free for investment opportunities or other expenses if you want them

Another reason you should invest in real estate now is that you don’t necessarily need to come up with a big down payment to buy a home. Some programs offer you the opportunity to be a homeowner with 5% or less than that. Let’s look at the best out there.

1.     FHA loan. FHA loan is the most popular option for individuals who want low down payment mortgages. You can deposit as little as 3.5% and get your dream house.

2.     USDA loan. USDA allows you to purchase a house with no payment down. However, the agreement is that you must accept buying the house within the eligible rural areas. Here, you don’t just have the opportunity to choose any house you like in any area. It must be within the eligible rural area.

3.     VA loan. VA loans are exclusively for service members. If you are a current service member or a veteran, you can purchase a house with a loan or no down payment.

4.     Conventional 97. This Fannie Mae-backed program allows you to become homeowners with just a 3% down payment.

5.     HomeReady mortgage. This Fannie Mae-backed program allows you to become a homeowner with just a 3% down payment. However, you must meet some specific requirements to apply for this program. This program is specifically designed to aid low- and middle-income earners in owning a home.

However, the disadvantage is that these programs have higher interest charges.

How Can You Make Money in Real Estate Investment?

I will show you seven proven ways to make money in real estate investment. You can decide to choose one or more to specialise in.

https://finvestn.com/how-to-investing-25k-in-the-stock-market/

1.  Long-term rentals

This is the traditional way of earning money in real estate. It is very common and has been in practice over the years. Rental involves allowing an individual called the tenant to stay on your property in exchange for a monthly payment. It becomes long-term rentals when it is a minimum of 6 months. The tenant signs a lease agreement and is committed to abiding with the rules of the property, including the monthly payment.

This type of investment requires less upkeep, as the tenant covers the minor issues in the property while you take care of the major. The increasing millennial cohort, low inventory and excessive student loan debt make this sector a growing market.

2.  Commercial property rentals

Commercial property rentals are the top three fastest ways to make money in real estate. It involves purchasing property, developing it to a certain level and renting it out to a company or a firm. You will have to work with an excellent designer to develop the property to the latest commercial building structure. Here, you are guaranteed a monthly inflow of money.

How To Create Wealth Investing In Real Estate: How to Build Wealth with Multi-Family Real Estate

  • ASIN ‏ : ‎ B07HBCV9RB
  • Publication date ‏ : ‎ September 12, 2018
  • Language ‏ : ‎ English
  • File size ‏ : ‎ 265 KB
  • Text-to-Speech ‏ : ‎ Enabled
  • Screen Reader ‏ : ‎ Supported
  • Enhanced typesetting ‏ : ‎ Enabled
  • X-Ray ‏ : ‎ Enabled
  • Word Wise ‏ : ‎ Enabled
  • Print length ‏ : ‎ 89 pages
  • Lending ‏ : ‎ Not Enabled

3.  Purchasing of bare lands

To taste the real estate market, you can buy land in an upcoming or hot area. You can either leave it for some years to appreciate and sell it off for profit or develop it into a structure that you can sell off or lease.

4.  Vacation and Airbnb rentals

If you have a house in a highly visited tourist area or locality, this is a good way of making good money out of the real estate. It is even more profitable than long-term rentals, although more tasking. You must build and furnish the houses in a modern style and ensure that all basic amenities are present. Then you employ a photographer to take a nice picture of the houses, and you can get them listed on vacation home websites like Airbnb and Vrbo. If you don’t want to be actively involved in it, you can employ the service of a vacation rental company to manage the property. 

5.  Renovation Flipping

You may have seen one or more HGTV shows focusing on flipping houses. The fix and flip real estate technique has become a massive pool of making money. However, you must be knowledgeable about real estate and mathematics to make money here. It involves locating less attractive homes in good and promising neighbourhoods, buying and renovating them, and selling them.

To succeed in this aspect of real estate, I will advise that you work with a highly networked and knowledgeable real estate agent to help you look for those potential homes. Also, you will need an excellent interior decorator after locating the homes and renovating them. You need an interior decorator to design the interior and ensure all modern amenities are present. This will help you sell the house at an excellent price and make a reasonable profit from it.

6.  Contract Flipping

One of the ways to earn money from real estate without having to put much capital is a contract or capital flipping. All you have to do is to find a distressed seller and a motivated buyer and link them both. Locating a distressed seller might sometimes be difficult. However, you can make use of Clothier.

The trick is to get a ready buyer, look for homes behind mortgage or vacant homes with distressed sellers, and initiate the transaction.

What are the Tips to Become Successful in Real Estate Market?  

Below are the rules you must consider to become successful in real estate. They are:

1.  Understand the market

Never go into a real estate investment without understanding how the market operates and functions. One of the ways to understand the market is to read about the real estate market. Below are the top three books that can help you understand the dynamics of the real estate market.

  • The Book on Rental Property Investing: How to Create Wealth With Intelligent Buy and Hold Real Estate Investing by Brandon Turner – Buy on Amazon
  • Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple by David M –  Buy on Amazon
  •  Loopholes of Real Estate (Rich Dad’s Advisors (Paperback)) by Garrett Sutton – Buy on Amazon  

2.  Choose your niche wisely

Choose the area you want to specialise in. It is contract flipping, vacation rentals, or commercial rentals. You can go into more than one aspect if you can manage it all.

3.  Try as much as possible to buy cheap

It gets a better return on investment. Ensure you tap into it now that the market is still rising. The cheaper you buy it, the high your returns.

4.  Choose your timing appropriately

Timing is essential in real estate. If you go into it at the wrong time, you may lose. Ensure you always keep a tab on real estate indices and news to understand the current market. This will help you with the timing.

5.  Maximum the value of the real estate

This involves looking for ways to make more profit for the same property. It can be using one part of the property as a warehouse or a flower plantation or leasing to the bank to install ATM there. You just have to be creative about this.  

6.  Diversify your portfolio

Don’t stick to one aspect of real estate. Try out as many sections as you can.

Frequently Asked Questions (FAQs)

What makes real estate a good investment

Real estate is an excellent investment because it allows you to generate wealth through a regular inflow of passive income (rental properties), value appreciation, and floating against inflation.

How can I be smart in real estate?

To be market in real estate, ensure you understand the market, diversify your portfolio, join a local real estate community, keep on a tab with current real estate news and don’t over-leverage yourself.

Can you get rich by investing in real estate?

Yes, you can be a million dollar rich and greater in real estate. You only need to be smart.

Conclusion

Real estate is one of the more reliable investments to go into. As long as you understand the dynamics of real estate, it will be hard for you to lose money. Also, it is a great way of planning for retirement or saving up your money against inflation in the future.

Leave a Comment

Your email address will not be published.