This article is written by one of our experienced agents, Gil Daigle.
I got a flu shot last week. Because it was a workday, I was wearing my nametag, which advertises me as a Realtor®. The nurse who was giving me the shot started to talk about real estate. The conversation started out like all of these conversations do with the nurse asking me “How’s the market?” I gave my stock answer that it could be better and then went on to say what a great time it is to buy real estate. I talked about the depressed prices and the low interest rates. When I was finished, he told me a story.
A Remarkable Story
Last November he and his wife started to invest in real estate. Between November 2011 and April 2012 they purchased four condominiums in Kirkland for $300,000 cash. He went on to tell me that all four are rented and they generate $4,000 a month. After condominium fees and other expenses, the monthly net is $2,500. A very quick and basic calculation indicates this is a 10% return on his investment per year. You might be asking yourself “so what?” The simple answer is where else can you get 10% interest on an investment that will increase in value.
What Other Investments Are Available?
I searched the Internet and discovered the best interest rate you can get for a certificate of deposit is 1.1%. The big catch is you must deposit $25,000. The stock market might be the answer. Unfortunately, the average gain of the Dow Jones Industrial average since 2000 is only 2.57% with the big catch being its wild fluctuations. In 2003, the Dow gained 25.32%; however, in 2008 it lost 33.84%.
Do we all have $300,000 cash on hand to invest? I’m guessing the answer to that is no. However, interest rates are very low even on investment properties. Check with your banker for rate information. Talk to me about the availabilities of property. Whatever your circumstances it make good sense to think about investing in real estate.
If you are a renter, take the plunge and buy. If you have a good credit rating, there are multitudes of financing opportunities available. Talk to your banker and see what works for you. Then talk to me, I’m sure I can find you something you will like.
We Are In A Unique Period of History.
We are in a unique period of history. Since World War I interest rates have been this low only once, between 1933 and 1950. Remembering your U.S. History that was the Great Depression and World War II. Currently the US economy is down and the government is doing everything it can to bring about a recovery. These real estate conditions will not last. Get your piece of the American Dream while is it at its most affordable!