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Real Estate question

kingsrookie said: "I have heard mixe4d things about the real estate market. Houses are cheap so I want to get two or three and rent them out to other people. But many people are not doing this. Is it not a good idea? I have talked to real estate companies and they have told me that the market has been slow and everyone is moving to rental homes because of the value of homes these days."

Mr. Gekko said: "Actually, the opposite should be true. People should consider renting when real estate prices are [I]high[/I] rather than low. The best time to buy is when prices are low. Buying a house is really no different than buying common stock. It sounds like your real estate agent is just trying to make a few bucks off of you (which is always their goal, anyway). That said, if you want to be a land lord in the future, now [I]would[/I] be the time to buy. I'm not current on the rental market but, I would prepare to have a few properties vacant for a while. Make sure you have enough capital to pay the mortgages on your own for a period of time. Better safe than sorry."

Kloewer said: "kingsrookie - Those real estate agents are right--there's a move afoot toward renting rather than owning. But the reason you got was wrong. It's not because the value of homes--as Gekko points out, this has the opposite effect. The reason more people are choosing renting now is because lending standards have tightened up tremendously over the last year. By requiring large down payments and financial documentation, many people simply can't qualify for a mortgage. They, in turn, rent. And I agree with your basic premise. If you have the income/assets to buy property, I think now's a good time to do it. I wouldn't throw too much of your worth into real estate, because we probably still haven't hit bottom in the housing market. But I personally bought a house last year that I'm renting out, and I'm in the process of buying a downtown hi-rise loft...also to rent out. As for value, you want to look for properties that are likely to return 1% per month on the value (not the price) of the property. That means you don't want to buy an investment property worth $100,000 unless it will command $1000 in monthly rent."

Mr. Gekko said: "[QUOTE=Kloewer;71052]kingsrookie - Those real estate agents are right--there's a move afoot toward renting rather than owning. But the reason you got was wrong. It's not because the value of homes--as Gekko points out, this has the opposite effect. The reason more people are choosing renting now is because lending standards have tightened up tremendously over the last year. By requiring large down payments and financial documentation, many people simply can't qualify for a mortgage. They, in turn, rent. And I agree with your basic premise. If you have the income/assets to buy property, I think now's a good time to do it. I wouldn't throw too much of your worth into real estate, because we probably still haven't hit bottom in the housing market. But I personally bought a house last year that I'm renting out, and I'm in the process of buying a downtown hi-rise loft...also to rent out. As for value, you want to look for properties that are likely to return 1% per month on the value (not the price) of the property. That means you don't want to buy an investment property worth $100,000 unless it will command $1000 in monthly rent.[/QUOTE] I should've written a disclaimer that I'm a novice when it comes to real estate. I was speaking purely from my own common sense, not from book knowledge. What Kloewer said makes perfect sense and is probably right. In addition, I would also say that it's most likely not just first time home buyers having issues purchasing properties. People who have defaulted on their mortgages (due to the housing bubble... and I'm sure other reasons) would also have issues applying for credit... of [B]ANY[/B] kind! They are also prime rental candidates."

aprilwms said: "When rentals start cash flowing, investors will buy them."

kingsrookie said: "the area that i live in the prices for homes is still high. townhouses are pretty cheap though and the average rent around here is 950-1250 a month. Its pretty high but the seling price for them is around 75 to 80k"

jolllyroger said: "I bet the prices arent high in your area, just that there are people out there still hoping to get 3 years ago values on their home. I can pick up properties all over the USA for under 50 cents on the dollar. It's so easy to cash flow properties right now but the real profits are in flipping. So what area do you live Kings? I'd love to buy one there if I haven't yet just to prove the point and I would be more than happy to wholesale it to you for cash flow if your interested."

Rodrix said: "Thanks for the advice. I know a Real Estate Expert which deals it online. Why don't you try it and gain some sort of information about real estate."