Minnesota Mortgage Rates
Minnesota Real Estate Downturn Proves to Offer Silver Lining for Investors
MINNESOTA -- Mar. 1, 2010 (FreeRateUpdate.com) - In every real estate down-turn, there are always opportunities present. While many with a bear market outlook on real estate are responding to the inherent economic data in existence over the past year which includes rising foreclosure rates, declining home sale prices, and the tightening
credit market, it’s essential to keep perspective through the media reporting. Real estate, unlike commodities sold on Wall Street is an essential part of any society and a physical necessity of the utmost importance. Anyone can live without gold, silver, frozen orange juice or many of the other commodities for sale in the financial markets. Regardless of price fluctuation, unless the overall health of our economy is on the edge of collapse, there will still be demand for housing. If a total economic collapse was imminent and threatened the fabric of our economy, home prices would be the least of our economic concerns.
As with any cyclical financial market, real estate will continue to be attractive for those who can navigate its waters. Shelter is a basic need of everyone and for those who can buy right and sell right, there is money to be made. Opportunities for real estate investors include purchasing distressed properties and reselling them quickly for an under market price. I call this strategy buy low wholesale, sell high wholesale. Another option for investors is to buy a property for 20%-30% off of market value and finance it so it cash flows as a rental property and then sell it once the market turns around.
This next strategy for first time home buyers is an excellent way to begin learning real estate investing. Let’s suppose the market value of the home they purchased is 235K, and they were able to get it for 200K. They purchase the home on an interest only mortgage fixed for 10 years with a total payment including taxes and insurance of $1,450. They live in the home for two years and then purchase their next home, opting to rent out the home with the $1,450 payment. They can then rent the home for up to three years and sell it without capital gains tax. The rent would most likely cover the total mortgage payment. Even if they sold the property for 235K after 5 years, that would average a five thousand a year of passive tax free income. That is a return of 2.9% tax free return (which is equivalent to a 5% pre-tax return), not bad for taking a very conservative position of assuming no price appreciation over the next five years.
While many strategies exist to make money in real estate despite current market conditions, it requires informed actions by those interested in pursuing the opportunities. For an initial consultation please feel free to call our office or send me an email. I look forward to working with you in the near future.
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FHA Mortgage 101
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- Conventional vs. FHA mortgage, the difference
- Conventional vs. FHA mortgage, the difference
- Conventional vs. FHA mortgage, the difference
- Conventional vs. FHA mortgage, the difference
- Conventional vs. FHA mortgage, the difference
- Conventional vs. FHA mortgage, the difference
- Conventional vs. FHA mortgage, the difference
- Conventional vs. FHA mortgage, the difference
- Conventional vs. FHA mortgage, the difference