As the number of foreclosures steadily increases, so do the opportunities to take advantage of the slumping housing market and to take the leap from renting to owning. Foreclosed condos are affordable investments that can provide you with the potential for return in your future. Now is the perfect time to purchase your own property instead of throwing all of your money away paying monthly rent.
If you have been stuck in the viscous cycle of renting for a number of years now is the time to break the cycle. Monthly rents are on the rise in order to accommodate a number of rising costs. Energy prices are steadily increasing and so are property taxes as cash strapped cities and villages that are running out of other options. With monthly rents on the rise, how much longer will you be able to afford the cost of living?
Instead of throwing your money away every month you could be applying your monthly payments towards your own property. The money that you spend every month will be recouped when you sell your property. Instead of merely paying a price to live somewhere, you will be investing in property that you will be able to sell for a profit in the future. If you purchase a foreclosed property that is selling below market value and you hang on to the condo for a couple of years until the real estate market improves, you will see a significant increase in value.
Foreclosed condos are selling well below market value. Banks are requiring low down payments in order to get rid of the properties. There are many incentives currently available for buyers. You may find that the monthly payments on foreclosed condos may be even cheaper than the monthly rent payments that you were making. There are also a number of tax incentives that are being offered to first time buyers and anyone that purchases a personal residence.
With the high number of these condos available you can even be selective in which unit that you choose. Many complexes have several condo units that are being foreclosed on and you will be able to find a condo that has the number of baths and bedrooms that you would like. Many of the condos are new construction or have recently been remodeled. It is a complete fallacy that foreclosed condos are in a state of disrepair or are old and dilapidated.
For decades - and especially the last decade - real estate investors seeking income have been advised to allocate a portion of their assets to real estate. After all, real estate offers a relatively high level of income (up to a 15% rental yield in some locations) and - as a hard asset - offers at very least some protection of principal.
In recent years, investors often sought diversification into real estate through real estate investment trusts (REITs), since owning actual properties outright was too expensive for the average retiree or income investor.
Bubble-era housing prices and the low interest rates that fueled them made it more attractive than ever for developers to build condos all around this country, but a recent decline in households' net worth, coupled with tighter lending standards, has made it harder than ever for developers to sell their properties. This bust for lenders has been a boon for savvy investors.
By employing a real estate auction company, savvy real estate investors are able to pick up condominiums in desirable locations like New York, Chicago, and Los Angeles for sometimes less than half of their original asking price.
And the case for buying condo properties now is compelling for many reasons. First, as an income-producing asset, real estate is almost unrivaled, since income can be realized in perpetuity (or until the building collapses) - try getting that yield with a bond!
Second, the prices that many real estate investors are paying through a real estate auction company often augment those yields and account for a good deal of greater downside in the market. Third, as a hard asset, real estate will outperform bonds or cash in an inflationary environment. And fourth, real estate is useful - it can be used as a residence. What high-yielding stock provides walls and central air?
Joking aside, most metropolitan real estate markets have taken huge hits, but there are some signs of stabilizing. The buyers who will make the most money in an inevitable long-term rebound in real estate are those that are willing to stick their necks out early.
Owning a condo offers an alternative to owning a soft-asset REIT for diversification and has the added bonus of being a hard asset that investors can live in or pass on to children, grandchildren, etc, and the ability to buy at auction offers the opportunity to get away with paying prices that - years from now - will seem impossibly low.