The best investments create high ROI and are low maintenance. Have you considered real estate as an investment?
The stock market is high. Bond yields are low. You own a home and have plenty of savings. So where should you invest any extra money and be you are choosing the best investments?
Consider what the smart investors have been investing in, quite successfully, over the past several years: land for sale and distressed real estate. The funds have spent tens of billions of dollars buying foreclosed homes and turning them into rentals and making real estate one of the best investments.
They also have entered the business of providing landlord loans of $500,000 to $50 million at above-market mortgage interest rates to mom-and-pop investors who want to join the Monopoly game. Such is the mood in the residential real-estate market these days. Across most of the nation, property prices are on an upward trajectory that should last through the next stock-market correction and even through much of the long-forecasted increase in bond and mortgage rates. When you purchase cheap land for sale, it can create you a great return on investment.
From an asset-allocation standpoint, buying properties to rent looks like the best investments. Self-directed investors and mortgage bankers believe property prices are more stable than equities are.
Banks still are seeking to sell almost 600,000 houses they have taken over from homeowners who defaulted. But the number of homes in default nationally, in 2014, was 1.3%, the lowest since 2007. Some 14.6 million single homes in the U.S. are owned by individual investors and small investment funds that own 10 homes or fewer.
Those who own a home already know how well real estate has been performing. Many home owners also might be wondering how they can leverage their so far-successful bet on a home in an era of low interest rates, when paying off or down a mortgage with extra cash may not make the most financial sense.
For those home owners, rental properties, small multiplex apartments, vacation homes, second homes or even adding a small property on the lot of their primary residence may all sound like the best investments.
Of course, taking cash out of a primary residence and buying another property like acreage for sale is risky. Only those who are well capitalized and can handle the unexpected, such as the steep decline in prices that occurred during the great recession, should finance any investment in this manner. Diversifying geographically, if possible, is helpful, too.
To learn more about choosing the best investments in the real estate world, contact a member of the Asset Quest team at 239-541-8448.