Buy or Rent a Home in 2008?
I still believe that this is the best time to get into the real estate investing business. However, the strategy used in this market may be the key to your success. I’m not so sure that all of the creative strategies taught buy the self proclaimed gurus will work in this current market. The differences in the strategies can make or break you as an investor. For example, if you are looking for short term investments in which you control or own the property for less than 4 months, i.e. house flipping, this market should scare you some. No one knows where the bottom is, including the gurus and even at a 20 percent discount (in today’s market) you could still be over priced in three months. Wholesaling (house flipping on speed) may be a safer route to take since in most cases, you only control the property for a very short time frame. The down side is you run the risk of not finding a buyer and potentially loosing deposits or down payments. Don’t get me wrong I am still a proponent of house flipping, however only as one car in your freight train to wealth.
Real Estate Investing Strategies in 2008
In another car there is the long term buy and hold strategy. This tried and true method of wealth building works just as well today as it did 40 years ago. Great deals can be found everywhere in the current real estate market. More and more home owners are becoming renters by the day, not to mention the first time owners than cannot afford to buy. According to the Census Bureau , which reported the home ownership and vacancy rates for Q2 2008 last week, the rental vacancy rate decreased to 10.0 percent this quarter. It’s expected that the rate will trend back towards 8%. According to the report there are 35.5 million rental units in the U.S. If the rental vacancy rate declined from 10.0% to 8%, there would be 2.0% times 35.5 million units or about 710,000 units absorbed. This is good news for landlords and investors that are looking to rent a residential property.
If you are having trouble deciding if this market is good to buy or rent, the The NY Times has a cool calculator that allows potential buyers to compare renting to buying in his/her local area.
