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In a recent real estate blog post I mentioned the possibility of a long term meager real estate appreciation values in the residential home market.
However, if you are seeking real estate as an investment, specifically as a rental income investment it might be worth your consideration.
Investor with cash can really find some bargains and possibly a profitable rate of return from their real estate investment. Those carrying a mortgage could also profit but more careful consideration would be in order.
The key would be selecting a positive cash flow after evaluating numerous properties considering numerous factors in your buying decision.
You will want to look at cash flow and re-sale analysis computed each year up to a 20-year time period. In addition, review the impact of income taxes associated with owning real estate such as tax depreciation, passive activity losses, capital gains and like-kind exchanges.
You might find good value in condo’s however look closely at the annual maintenance fees which can increase to a point of going from a positive to a negative cash flow.
I strongly suggest you work with an expert with the number crunching side of this, not a realtor. You may consider an accountant (CPA) or a financial planner who specializes in these types of calculation.
You might have to look at ten or more properties in order to find a reasonable cash flow situation. It’s time intensive as you will have to personally review quite a few properties and run the numbers on each property.
Dan
