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Roshael, Home Buyer in Marietta, GA

Is now a good time to buy an investment property given the churn in the market? I know that you will always

Asked by Roshael, Marietta, GA Wed Oct 29, 2008

be able to find a better deal. The question is what is your opinion on has the bottom hit in the real estate market?

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All markets differ; strategies that might work in one area, might fail in another.

Now is probably not the time to flip in Philly; however, it is a good time to flip in Atlanta, Dallas, and some parts of metro DC. You can verify this by checking out various REI clubs and/or forums, FSBO websites, and Craig's List in those markets. You can also verify this by contacting other investors and several realtors in those areas who specialize in working with investors.

Now is definitely not the time to flip in most parts of the Midwest; yet, it is a great time build up a portfolio of properties there as stated earlier. For example, it is a good time to build your portfolio in areas like Kansas City, Indianapolis, and Columbus.

Atlanta and Dallas are kind of odd in that they're also good markets to buy and hold properties.

Caveat emptor . . . you really need to check out the market data for a particular area, and you need to analyze the numbers for each deal. Be realistic. Don't guess. And don't be afraid to ask questions; most realtors and investors are glad to lend a helping hand. Besides, you never know . . . you might end up partnering with them on one or more deals.
0 votes Thank Flag Link Thu Oct 30, 2008
Roshael,

I do not believe it is a good time to flip a property. Now is the time to build up a portfolio if you are an investor, and rent those properties out. The best time to sell is when prices rise again. Buy low and sell high.

Renee Porsia
Associate Broker
RE/MAX ACTION REALTY
(215) 669-0589 Direct
(215) 358-1100 Office Ask for Renee
http://www.reneeporsia.com Where you can get your free market snapshot!

"oh by the way, I am never too busy for your referrals"
0 votes Thank Flag Link Wed Oct 29, 2008
The answer depends upon your exit strategy (ie what you intend to do with that property).

Now is a great time to purchase investment real-estate to flip or rent. Any property can be be a good or bad investment at any price. I know that sounds counterintuitive, and I'll elaborate. Let's say you acquire a house for free. Sounds like a a great deal so far, right? What if that property requires $60K in rehab costs, will take 3 months to do the work, and will take 3-6 months to sell? You'll need to make sure you have access to enough capitol to rehab, hold, and market that property until it sells. What if your holding and marketing costs total $20K? Basically, you'd earn money if you could sell that property for more than $80K, and you'd lose money otherwise otherwise.

Technically, although you'd break even (on paper) if you were to sell the property for $80K, you'd still lose money--because you worked for free.

Also, consider the time value of money. Would you prefer to A) wait another 3 months to save another $15K, or B) purchase that property now and earn $500-$1000 per month (after debt service and pre-tax)? Personally, I'd prefer to get that house now, and have that extra $1.5K-$3K in 3 months. Afterwards, I could take a third of that income, and gamble it away in the stock market. Just kidding, . . . but I think you see my point.

Yet, there's nothing wrong with waiting if you feel you're not ready to make a purchase right now. Take your time, and do it right.
0 votes Thank Flag Link Wed Oct 29, 2008
Hello Roshael,

Great question! I saw the response from the "non realtor" and of course that is that person's opinion. But, coming from someone who is in the industry, I ask you to think about what I am going to say for just a moment. For the past 5 or 6 years, the real estate market was considered to be a "seller's market", prices were ridiculous and there were 4 buyers for every property, buyers were forced (by the market) to make on the spot decisions if they really wanted the property, forego their home inspections if they wanted to make their offer better than other offers , had no time to compare properties and in most situations had to bid over asking price for the property. Now, home prices are going back to "normal", they are not ridiculous, there is plenty of inventory, buyers can compare many properties, not give up any of their inspections rights (which I never recommend in any market), rates are still very low and take time to think about their situation. Given those two scenerios, which of the two is best for buyers now? So, should you take advantage of this great change in real estate market or should you wait until prices go back up which they will over time. Remember, the people who purchased homes at over inflated prices now have negative equity in their homes. The answer is very obvious. If you want to buy, now is the time.

Renee Porsia
Associate Broker
RE/MAX ACTION REALTY
(215) 669-0589 Direct
(215) 358-1100 Office Ask for Renee
http://www.reneeporsia.com Where you can get your free market snapshot!

"oh by the way, I am never too busy for your referrals"
0 votes Thank Flag Link Wed Oct 29, 2008
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