January 2017

7 Reasons NOW Is a Great Time to Invest in Real Estate

 

You work hard for your money, but does your money work hard for you? When you store your cash under your mattress (or in a bank if you aren’t a weirdo), it will produce next to nothing. However, when you put money into an investment, your dollars go to work for you.

Plain and simple: Investing is how you become wealthy.

But what is the best “job” for your dollars? How can your money earn the most and offer the least risk? In my opinion, one investment stands head and shoulders above the rest: real estate.

Yes, real estate is subject to timing; and there are times when real estate is not the wisest investment. However, I believe that right now might be the greatest time to buy real estate that we’ll see for another decade or longer. Here are seven reasons why.

1. Interest rates are incredibly low.

Although the “Brexit” scandal that just rocked the world and caused financial markets to tumble, there is one segment of investors who will benefit from the news: those with money tied up in real estate. Why? Two words: Interest rates. Low interest rates lead to low monthly payments, which is great for real estate investors looking to maximize their profits.

Interest rates, which have been at historically low levels for the past decade, have been slowly climbing over the past year, and until recently, most analysts believed that a series of rate hikes from the U.S. Federal Reserve was coming soon. But, with the shaky markets, the opposite has happened: Interest rates have dropped. According to a recent article, “The probability of a federal funds rate hike at the Fed’s next three monthly meetings has collapsed to 0 percent, and traders are assigning a less than 8 percent chance of a rate increase at all this year.”

Related: Even if You’re an Expert Investor, Catastrophe Can STILL Happen: This Story Proves It

Several years from now, we’ll look back and say, “Remember back in 2016 when you could get a mortgage under 4 percent? Those were the days!”

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2. Banks are lending once again.

In the collapse of the real estate market in 2007 and 2008, many banks tightened their lending standards to such a degree that obtaining a mortgage became next to impossible for many Americans. However, gradually over the past several years, banks have once again begun opening their vaults and relaxing their standards.

No, this doesn’t mean you’ll be able to obtain a 125 percent loan-to-value mortgage with no money down based only on “your signature,” as you may have done during the mid-2000s, but if you have a job and decent credit, obtaining a fixed-rate loan shouldn’t be impossible.

3. Prices are reasonable.

Yes, real estate prices have climbed significantly from their 2011 and 2012 lows. However, for those willing to hustle to find great deals, great deals can be found. This is especially true for investors who buy bank foreclosures. According to RealtyTrac, there were over 100,000 foreclosure filings in May of 2016, showing only a mild decrease over the past year.

For more on buying foreclosures, check out my article “How to Buy a Foreclosure: The Comprehensive Guide to Buying a Foreclosed Home.”

4. Technology has made investing significantly easier.

In the “olden days,” investing in real estate took a significant amount of driving around, talking to people, waiting, looking at hundreds of pages of documents and other difficult, time-consuming tasks. Today, technology has made investing in real estate significantly easier. For example:

(Continue reading on BiggerPockets…)

BRRR Calculator

Let me ask you a question:

How would you like to spend tens of thousands of dollars fixing up a property, get it rented out, and then realize that it doesn’t actually make you any money?

Doesn’t sound too fun, does it?

My name is Brandon, author of The Book on Rental Property Investing, and today I’m excited to give you a tour of the brand-new BRRRR Calculator from BiggerPockets. This incredible tool will allow you to analyze a fixer-upper rental property — including cash flow, cash on cash return, total investment, and more — in under five minutes.

Sound too good to be true? Well, stay tuned, and I’ll show you how easy it can be.

(Watch the video below or read the transcript that follows. Or both. The choice is yours!)

What is BRRRR Investing, Anyway?

So before I show you the calculator, let’s all get on the same page on exactly what it means to “BRRRR” a property.

No, I’m not talking about buying a house in the middle of winter. I’m talking about:

  • Buying a property (usually with short-term funds like cash, private money, hard money, or a partnership),
  • Rehabbing that property,
  • Renting that property out,
  • Refinancing the property to pay off the original loan, and then
  • Repeating the process over and over.

If you want to learn more about this fantastic BRRRR strategy, read our free eBook on the subject at www.BiggerPockets.com/BRRRR.

OK, so let’s get to the tour.

First, you need to access the calculator, which you can get to by going to www.BiggerPockets.com/analysis. Once you click on the “start an analysis” button, you’ll have the choice of several different calculators. Choose the BRRRR calculator.

Real_Estate_Investment_Calculator

Related: How to Calculate Cash-on-Cash Return

Page One of the BRRRR Calculator

The BRRRR calculator is similar to the BiggerPockets Rental Property Calculator, the Flipping Calculator, and the Wholesaling Calculator in that it contains three pages, followed by a final results page.

(Continue reading on BiggerPockets…)