A Buyer’s Market Beckons
When we polled the Invstr community for the best investments you anticipated making in your lifetime; real estate almost won it. So, listen up! New data suggests that the tables are turning in the US housing market, teasing a potential opportunity.
Tenant rental rolls go around and come around. When there’s a shortage of housing, landlords and realtors can get away with higher rates. However, in times of housing oversupply, occupancy is low, and so is rent. That’s a buyer’s market, and things may be shifting that way.
A man’s home is his castle, and Fannie Mae’s monthly survey shows the buying process won’t be rushed. House buyers are way more “picky” than ever before, and the sheer number of listings means there’s rarely a bidding war for your dream pad. This has put aspiring real estate moguls on high alert, and it’s no surprise the business is so attractive.
Debt is the dealmaker, and low interest rates have made debt cheap. Every investor would have debt up to their eyeballs when trading stocks if it wasn’t so risky and expensive. In real estate, it’s not. The business is built on borrowed money. Slap down a twenty percent deposit, and you and the bank own the place. From the get-go, real estate aficionados can charge rent based on the entire value of the property, with that money hopefully going over and above what’s needed to pay off the mortgage. Investors get rich sooner than they do with stocks, but that success also plateaus sooner as managing a tenant can be quite a handful.
Investors feeling less cavalier can play along, too! Real estate investment trusts are simply landlord stocks. They’re dividend champs, gaining you exposure to a diversified array of real estate. Some of the big boys of the industry include Simon Property Group, AvalonBay Communities, and Prologis. Keep your eye on that housing market data. A cyclical industry is cycling, so get your capital ready!