May 6 2011
Today’s real estate investors have the opportunity to help local communities and economies plagued with distressed properties recover by bringing dollars into the marketplace.
Lyons Realty’s agents evaluate investment properties, rate properties by highest potential overall return, provide research tools, and connect investors to real estate service providers who can help them perform the proper due diligence (pre-acquisition) and maintain the property (post-acquisition). As a result, we help individuals and families make sound investment decisions for their future.
According to the Mortgage Bankers Association (MBA), home ownership will remain a dominant goal of the US population, however, various data sources show an upward trend in investor activity in certain U.S. housing markets, especially in the coastal areas where home price appreciation has been outsized, attracting investment capital. While rising interest rates could depress the growth of the investor market, 59% of investment buyers paid cash in 2010.
Stability (Stocks vs. Real Estate)
Historically most Americans have chosen to participate in the stock market for investment income and retirement growth thus spurring many online stock investing platforms such as E*TRADE, Scottrade, and TD Ameritrade.
Real estate, however, provides comparable returns, more cash flow, and better tax advantages than stocks. In the past forty years homes have appreciated annually at an average rate of 5.32%. Furthermore, real estate investors’ benefit from monthly cash flow, leverage, and the tax benefits of depreciation, expenses and 1031 exchanges.
Investing in real estate has been fairly stable over time in comparison to other investments. The worst yearly loss for the S&P 500 was -37% in 2008. In contrast, the worst loss in median home price was -9.5% from 2008-2009. Over the long run, real estate might appreciate at a lower rate than some stocks, however because real estate is less liquid it is exposed to less volatility than the stock market.
It is important for buyer to remember that real estate investing is a non-emotional event and always comes down to just math.
Acquiring real estate assets not only provides security and stability, but also yields monthly cash flow. The basic need for shelter along with the recent housing crash have caused an increasing number (32%) of Americans to rent and depend upon real estate investors to provide them with housing.
Can investing internationally in places such as Dubai Real Estate, Argentina, Panama and Vietnam make sense? Americans have recently been deterred from investing internationally in places such as the UK or Euro zone but other countries may make sense – especially those with a lot of fertile land. All this talk of “end of the world” has spurred some to invest in farmable land with water and other natural resources. We have seen Asian, Canadian, and Euro buyers purchasing in the US utilizing geographic currency arbitrage.