Don’t Miss This Boat, It Looks Like The Tide May Be Turning!
Yes, it may be too early to label this as the beginning of a market recovery, but it certainly is the beginning of some positive activity in the low end home sector. Just think about it. In sunbelt areas like Phoenix, Arizona, you can find a nice home in the $40,000-$60,000 price range. It is amazing to see houses that were $150,000-$240,000 just a few years ago going for 25-30% of the previous values, and that is not going to go unnoticed for long.
The movement is going to be even more apparent once the word gets out to the first time homebuyer’s that the same house that you may be renting today for $800 can now be “owned” for less than $500 per month (including taxes and insurance). The real kicker is that you can also get cash back from the government in 2009! For example, if you put down “borrowed funds from family” in the amount of $1750, plus closing costs of $2700, you will still have more than $3500 to upgrade your home after you pay back Mom and Dad for the short term loan. In addition, you still have $300 each month in extra housing budget that you can save or apply towards your principle. And of course, there is still the possibility of positive tax benefits from using the mortgage interest deduction, if you qualify. Why would you not buy a house now?
Since most of our readers are investors, you may be saying…yes, this is nice information, but not helpful to me. Not true! First, you can start by doing your part to help the economic recovery by telling your kids, co-workers, and friends about the opportunities available to anyone who has not owned a home in the past 3 years (considered 1st time homebuyer). Second, you as investors will benefit, because you may just want to think about buying a few of these “little houses” before the competition heats up, along with the prices.
In my opinion, the first signs of our recovery are going to happen in the sectors that have access to government financing and the tax credit benefits. At some point in the near future, the message is going to become clear to this “first time home buyer segment”, that the time is now! If you can jump on board the “little house” boom before it starts to boil, you can grab a few of these deals, get them upgraded to qualify for FHA financing (flooring, major appliances, etc.), then either rent them for a few years while they grow in value or just put it back on the market in a few months and make a modest spread.
So, stop sitting on the side lines waiting for the news to tell you the market is coming back. Your ship may have already sailed, if you do!
