Where to Invest in Real Estate?

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Home Buyers Credit Repair Investors Articles Blog Listings Links Link to us Contact us	March 2008 - - - Where to invest in Real Estate? Where to invest in Real Estate? This is the big question on the mind of many seasoned real estate investors and aspiring investors. Invest in the Foreclosure hot spots? The real estate market is down by 20% or more. In several states the foreclosure rates are downright scary. Each weekend auction houses try to sell hundreds of homes at bargain prices. Tens of thousands of homes are in various stages of foreclosure in each of these depressed markets. Excellent bargains can be found at these auctions, provided you are planning to move into the house and stay there for a couple of years until the market turns around. These are NOT investment opportunities. Why are these foreclosures not good opportunities for investors? The foreclosures in states like California, Nevada and Arizona are homes that used to sell for example for $700,000 and now are let go for $400,000. For sure a real bargain. What can an investor do with this house? He can NOT flip; there are no buyers. The few buyers on the market are able to find bargains with the help of hungry real estate agents. He needs a fat mortgage, that the banks are reluctant to give to investors. He may be able to find a tenant, but only at a rent that loses him money on a monthly basis. Conclusion: investors stay away from foreclosures!!. Invest in depressed areas with good rental returns!!!! In this day and age real estate investors must look for depressed real estate markets with a good rental demand. Low house values and yet rents at a profitable level. Such a market can be found in Detroit, Michigan. We will explain why this city qualifies as a good target for the savvy Real Estate Investor. Recent Detroit history The auto industry is big in Detroit, but has had a number of bad years. During this time thousands of auto workers were laid off. Some of those who were home owners who unfortunately had to give up their homes. As a result house selling prices dropped. At the same time the number of tenants grew. The housing market deteriorated, but the rental market improved. Economic outlook Despite the still bad sales numbers of automobiles, the Auto industry is optimistic. A lot of the fat has been removed from the organizations, pension funds have been transferred to the unions and more parts manufacturing has been outsourced. Ford has already announced that it expects to generate a profit in 2009. Experience shows that soon after the slimming down of a corporation and at the first sign of profits a company starts to hire new workers. At the same time the State of Michigan is recruiting new and different kinds of businesses via TV ads airing around the country. Several Michigan delegations and road shows have been sent to Europe and Asia to attract foreign companies to get established in Michigan. Tax breaks and other benefits are being offered. You see that many forces are at work to get the economy in the area to rebound. As a result home prices will soon go up. City development A lot is being done to revitalize the city of Detroit. GM invested heavily in a huge new world headquarters in the Detroit downtown area. New casinos have opened and new ones are being built. Other types of businesses have been attracted to downtown Detroit and new commercial buildings have been built and older buildings are being renovated. Downtown Detroit is undergoing a complete transformation, which will benefit the whole city and generate more prosperity. This is a positive development, the state of Michigan as well as the city of Detroit are attracting new business and new economic activity. These activities are signs that the worst is over and the Detroit economy starts growing again. Real Estate prices have bottomed in Detroit. Investment number crunching. In Detroit there are many single family rental properties for sale for around $50,000. Typical properties with 3 bedrooms and 1 bathroom. Such properties fetch an average rent of $650 per month. Rule of thumb for a positive cash flow is a monthly rent of 1 (one) percent of the purchase price. Rental properties in Detroit easily generate more than 1 percent per month. Based on the current rock bottom prices the real estate investor can generate income for many years and at any time sell the rental property for a profit. Try to achieve this in California or Nevada. The most you can generate from a $400,000 property is $2,000 in rent, or half of a percent. You will lose money on this kind of an investment property. Conclusion: Detroit has one of the lowest real estate price levels of the country One of the best investment appreciation prospects in the nation Rental income is relatively high Positive cash flow is easily achievable. Detroit is today's best Real Estate Investment market in the nation. Bowery West Want to know more? Send us an email: Enquiries@BoweryWest.com
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