November 16, 2009

Investing in Real Estate is one of the best ways to create financial independence and wealth. According to many, more millionaires have been made in Real Estate than any other segment of the economy. Many critics of investing in Real Estate will point to the average appreciation rates of Real Estate and compare it to other investments such as the stock markets or mutual funds. The problem with those kinds of investments is for most people they can only use their own money. With Real Estate you have the opportunity to use OPM….other people's money. In fact, if you buy under the right strategy you can acquire Real Estate assets using only other people's money. If you are getting a 5% return per year with very little money out of your pocket, you are making a much bigger return than almost any other investment category.

Assuming you agree, the question remains as to when it is a good time to acquire investment Real Estate. Some people will say almost anytime is a good time. Every market has it's own market conditions and it is good to have the advice of a local Real Estate team of professionals. I will restrict my comments to my local market in the Seattle and Bellevue area. You will want to know how to structure a purchase so as to have a manageable cash flow. This involves knowing which areas of a given market area give you the best opportunity to manage cash flow while giving you the maximum appreciation upside. A Realtor that specializes in that area has to be one of your resources. A tax professional that can analyze your tax implications can help as well. A mortgage professional that can find you the best financing options is also a necessary part of your team.

So why is this an unprecedented time to buy Real Estate investments? Right now we have a very uncommon combination of low prices and low mortgage rates in the Seattle/ Bellevue area. Home prices have dropped to prices not seen since 2006. On top of that there is a large variety of distressed properties that are priced below those levels. Seattle mortgage rates are also low right now. In fact, Seattle mortgage rates and Bellevue mortgage rates are almost as low as they have been in 50 years. This does wonders for cash flow as you can currently acquire a property where rent will cover the total PITI payment. It is possible to be cash flow neutral on mid priced homes as well as low priced. Higher demand areas will command higher rent. A Bellevue home mortgage payment can often be covered by the higher rents commanded in areas around Microsoft, for instance. As the rental rates appreciate over the years, your cash flow will increase while renters are paying off your asset. These circumstances are area specific so make sure you consult with your real estate agent and mortgage professional to match these numbers together. Please contact me with your mortgage questions. My team can assist you with the best loan options in the Seattle mortgage market.

On top of this, I have the unique ability to help people invest in real estate with very little money out of their own pocket. See my special report on buying investment properties and contact me for more information.