I am wondering what numbers and facts you look at to establish if a market is prime for investing? Let me provide a little info on a market I have been looking at…
The market has been increasing for around 10 years
Not a lot of local flipping
One home sale I am aware of sold the first day on market to a private party after two parties bid against each other. It was a 5 bedroom for less than 200k in a good neighborhood
The people who bought that house sold theirs the first day in market.
The median price is around 175k
That’s pretty much all I know of the market. I think I read the house prices went up 25% in the last year, yet compared to many other areas houses here are literally dirt cheap.
I have funds to invest, I am wondering if what I described is a good or bad market. Again, I know nothing on REI and I am beginning my quest to learn this area of investing.
Thanks
Tom
What state are you in? If it is going up by 25% per year I guess it really does not matter what you buy just buy buy buy! I look at it like this if it is going up that fast it will not just suddenly level out it will start to slow down the level so sell when it drops to say 10% per year!
Just my thoughts!
Make sure you look at appreciation rates from the past few months. Many places went up over the past year or so, but the past few months in many markets tell a different tale. You don’t want to buy based on figures that includes a spike that has passed.
Where do you locate recent month’s appreciatation figures?
What facts & figures indicated hot areas such as Las Vegas, California, Phoenix as being hot spots for investors? If you know what specific figures indicate a housing boom, is it just a matter of looking for similar numbers to minimize your investment risk? What facts should I look at?
Well, I know the Vegas market very well since I have lived here for 25 years. I can tell you that lately, our appreciation levels have reduced back to a little above normal.
We are still a solid place to invest though because we have more than just a “spike” going for us. Growth numbers, job forecasts, retiree movement, et al.
If you are truly interested in an area, get the local paper delivered to you. Also check out the websites for the local news and papers. Normally you can find lots of great recent RE facts and figures.
The main reason our home prices have leveled is over-supply. There are currently about 70% more homes on the market than this time a year ago and 50% more condos than a year ago. Buyers no longer need to fight over a single property like last year. My mom sold one that got 30 offers in 24 hours. Talk about work lol
A lot of sellers are taking less than asking price right now and homes are starting to sit. Sure, you have the occasional fast mover. I am staring at a home that has been on the market for 2 months now. Last year, it would have been bought over asking in 1-4 days.
It really helps to know an area because while a city maybe “hot” there may only be portions of that city that are the true hot zones. Also a city might be “cold”, but have hot pockets.
What makes an area hot? Can you find an up and coming area by looking at numbers, before it’s a full blown hot zone? What numbers do you look at?
“Hot” means different things to different people. For a someone looking for rental props, a hot area might be a solid potential rent to home price spread, ability to clear $x per month, high % of renters, low vacancy rates, good job growth, et al.
To a flipper, it might mean out of control home prices going up.
What interests me is buying a under 200k single family house, doing MINOR cosmetic changes, renting it anywhere from 6-18 mouths and then selling it for a healthy profit. The benefit I see, is currently I rent, so if ever I couldnt rent it or if the housing market goes flat I could simply live in it.
What does it take to be able to rent a home for enough to cover your costs? Specially financing? Interest only loans, etc? I wouldn’t care if I was losing a few hundred a month on a property if I could make it back and much more a year or so down the line.
Having never purchased a home, there are a few areas I don’t understand. First off, Financing. What methods of financing are most attractive for a buyer looking to resell 6-18 months down the road? What does it take to get a zero down, low closing cost, low as possible monthly, type of loan? I have a good credit score and frankly enough liquid assets to purchase the homes I am interested in, outright. Does having a good amount of liquid assets work favorably in obtaining great financing terms?
Also, when it comes time to sell (6-18 months from now), how much of a factor does ‘marketing’ play in selling it for that much more than the rest? For example, taking out attractive ads, offering buyer incentives, etc?
Oh, one other issue. What type of house is the most profitable for what I described above? Meaning purchasing an average everyday home that is for sale or purchasing one that the owner is in financial trouble?
Thanks
Tom