Written by CHUMA
As the value of homes decrease, and the economy seemingly is in jeopardy of going into recession, one has to decide if this is a good time to buy or sell a home. Unfortunately, selling a home right now is very difficult as the real estate market slumps and foreclosures are at an all time high. But for the serious investor, this is a perfect time to cash in on the decreased home values and the low prices that homes are selling for these days.
Investing these days is about taking a chance, and being able to remain grounded in an uncertain economy. If you are the average home owner trying to sell your home, be prepared to maintain your mortgage payments, because the real estate market has become a bit depressed. The value and prices of homes have been on a decline since the beginning of the year. So if the equity in your home is valued low or zilch, you may want to consider waiting for the market to improve--which may take a few years. If you are interested in buying a home, the mortgage lending companies have tightened up their lax loaning practices and have become very strict on guidelines due to the rise in foreclosures nationwide. But buying a home is still possible, whether you’re intent on being a savvy real estate investor or just interested in having a place to call your own. I’d say consider trying these alternative strategies that I discovered while doing some web-surfing:
• Go "downscale." Instead of buying the best property you can afford in an upscale neighborhood, buy a duplex or other multi-family housing unit in a less desirable neighborhood. There is always a demand for moderately priced housing and having one or more rental units contributing to the monthly mortgage can make a big difference. (There are tax benefits to being a landlord too. Talk to an accountant).
• Become a landlord. Don't want to move to a more modest neighborhood? Fine. Stay in your apartment and buy a piece of income property -- a duplex, four-plex or single-family rental home in a "less desirable" neighborhood. You'll need to invest sweat equity in making repairs, collecting rent, etc., but your tenants will be paying your mortgage and building your equity.
• Think big, spend small. The rich didn't get that way by throwing money around. Cash is always king. Cut back on little luxuries -- Starbucks and that big new SUV for starters. Drink Folgers and get a used Corolla. Stash the cash in a 401(k), CD or reputable mutual fund. In a few years, you'll be in a better position to snap up a nice piece of real estate and get a decent fixed-rate mortgage.