Depending on where you are in America right now, real estate might look like a very tempting investment. Across the board, housing prices have dropped by 50% or more, and interest rates have never been lower in our lifetime. What could possibly be bad about taking some money and putting it back in the housing market right now?
Unfortunately, quite a few things can be bad. Because in this market, in this economy, the money you’ll be spending is only part of the equation. The other, more difficult part is how you are going to get that money back.
First of all, just because the price of a property has dropped by half doesn’t mean that property is undervalued, and that all that equity is going to come back sometime in the near future. Remember those real estate prices that kept climbing and climbing? We just got out of that bubble, and some experts feel the recent price drops were more along the lines of a correction. And the fact is, whether or not prices will eventually go up (and I do believe they will), and regardless of how high they will go, real estate is definitely not the place to make your money back in a short period of time.
The reason? Maybe you can buy a property at an attractive price, with attractive terms. But will you be able to sell that same property for a price you consider equally attractive?
Is the area attractive to actually live in, or just to buy a property to sell in? Because the wrong area isn’t going to attract the right buyers. And by “right buyers,” I mean buyers who will be able to qualify for a loan.
Actually, I’m getting ahead of myself here. First, you have to …Read More