It’s the Ideal Time to Buy
I cannot name an investment where the investor can have someone else pay for it, other than real estate. There has never been so many great opportunities to invest in real estate as there is at this time in history. Prices are low, interest rates are low, the supply of available homes is high and the demand for rental properties is high. The low prices and interest rates make monthly mortgage payments low enough to provide positive cash flow for investors each month while a renter pays off their investment. Home values have dropped and in time will begin to appreciate while the principle is being paid down by the renters. Many families have lost their homes to foreclosure and short sales and are looking to rent while they recover and repair their credit.
A six- bedroom, four-bath, 3,000-square-foot home in South Mountain Village is on the market now for $250,000. This home originally sold for $369,000 in 2005. The principle, interest, taxes, insurance and homeowners association fees would add up to approximately $1,550 a month. The home would easily rent for $2,200 a month– providing the investor a positive cash flow of $650 a month. When the market turns around and begins to appreciate again, a 3,000-square-foot home is going to be worth much more than $250,000.
I realize that you may be thinking “but I can not sell the home I am currently living in.” However, now is the time to make an investment, while prices are low, to offset the home you may currently be upside down in. Using the above example, buy the same home down the street at $250,000–$119,000 less that the home you live in. In 10 years it could likely rise to the price you purchased your home for–$369,000–providing you a gain of $119,000 while a tenant is making the monthly payment and paying down the principle for you.
Now is the perfect time to move to your dream home. Homes in Talasera, a luxury mountainside community, are selling in the high $300,000 range. These homes averaged $800,000 over the years and topped out in the $1.2 million range at the peak. A monthly payment for a home in this neighborhood will run approximately $2,000 a month. Many families are taking advantage of the market and moving their families into neighborhoods that at one time the home prices were out of reach for them.
It is also a great time to invest in a second home or home for retirement. If you have family or friends that would like to retire or vacation in the Valley, now is the time to buy. A three-bedroom, two-bath, 1,450-square-foot home on The Raven golf course is listed at $114,500. This is a perfect retirement home or vacation home. It is centrally located, low maintenance and in a secure gated community close to the airport.
Is building a custom home your dream? Lot prices for an acre are $20,000 to $30,000, as low as they were 15 years ago. Even at these low prices it is hard to justify building when you can get a home on a lot for less that what it would cost to build. A manufactured home near the mountain, on one acre is listed for $90,000. This would run approximately $600 a month and could be rented for $1,000-$1,200 a month, netting the owner $400-$600 a month while a tenant pays off their lot. In the future the manufactured home can be sold and relocated and you have an improved lot ready to build on.
A 4.5-acre acre property with an older home is listed for $250,000. This property can be divided into several home lots. Investing in this home would run $1,500 a month. An investor could sit on this land and have a tenant making their monthly payment, or covering at least most of it until the market recovers at which time they can subdivide and build or sell.
Buying land that borders the park/preserve is always a great investment. Currently listed is a magnificent property that borders the preserve on two sides. It has panoramic views of the city skyline and is only $390,000 for 10 acres. A mountainside lot on the preserve is the equivalent to buying beachfront property from an investment standpoint.
Don’t let the doom and gloom reporting you hear from the media stop you from investing in real estate. Now is the time to plan for your financial future and invest in real estate. Even better, invest in real estate and let someone else pay for it.