Real Estate Investing - Is It Still Profitiable in Today"s Economy
Remember the house flipping craze that took over your TV about 5 to 10 years ago?
Remember seeing the incredible profits,
and seeing how easy it all was? Go out,
find a house that is selling well under market,
throw a few coats of paint on it and collect your
$50,000!? Trust me, I do remember it.
In fact, it was those very shows that got me interested in investing in real estate.
But, the question is€¦..
Can Real Estate Investing Still Be as Lucrative as it was Before the Economic Decline?
If your just getting started, the answer is both yes and no, but really relies on where you are financially. Everyone knows that it is easier to make money if you have money! I'll give you an example. I have a friend who is pretty well off financially. Is he a millionaire? No, but he does have money sitting in the bank. So what does he do? He just goes out and pays cash for a $35,000 house, puts $10,000 into it and sells it for $65,000. He doesn't have to worry about paying a bank note while it sits, and more importantly, he doesn't have to try to get a loan from a bank. I've seen him do this several times in just the last year! (2012)
What if you don't have that kind of money?
Well, friends welcome to the US economy at it's present state. I own several pieces of real estate and have flipped successfully for going on 8 years now. But guess what? Banks are getting more and more frugal with their money.
The Days of the Good Ol' Boys are Gone!
I have bankers as friends, I've made strong connections with other banks I've worked with, and guess what? It's not up to them individually anymore! They would love to give you the money! They have to jump through a million hoops, present their case to the president, who in turn has to present it to the bank board, who then tries as hard as he can to make it as difficult as he can to give you the loan! Knowing people does not work very effectively anymore, and it just isn't the large banks I'm talking about. It is extremely difficult to get a loan through a small community bank for real estate as well.
What really ticks me off about banks!
I have great credit and have never been a day late with any bank note I've ever had. I can present them with a proposal, and show them on paper how a certain investment is fail proof, and they will do everything they can to dodge and discourage me! I have something that will make both me and you money, and you won't give me a loan for it!
It doesn't make sense€¦€¦.
But if I went to the same bank and asked for a $30,000 loan for a boat, I would walk out of there with a check today! How does that add up!
But can you really blame the banks when it comes to real estate investments?
Wait. When you start to think about it, why would they give you a loan? The economy is at a point where the interest rates are so low, trying to get people to purchase houses to live in (much less risky for the banks), why would they give you a loan at 3.5% interest, when they can simply put that money into a government bond of some sort and draw 5-6%? That doesn't make sense for the bank now does it.
So back to the original question?
Is real estate investing still as profitable today? In my opinion, yes, if you have capital. No, if you don't. There are ways to still invest in real estate without much money, but the profits are much more long term. I will discuss that in another article.
Remember seeing the incredible profits,
and seeing how easy it all was? Go out,
find a house that is selling well under market,
throw a few coats of paint on it and collect your
$50,000!? Trust me, I do remember it.
In fact, it was those very shows that got me interested in investing in real estate.
But, the question is€¦..
Can Real Estate Investing Still Be as Lucrative as it was Before the Economic Decline?
If your just getting started, the answer is both yes and no, but really relies on where you are financially. Everyone knows that it is easier to make money if you have money! I'll give you an example. I have a friend who is pretty well off financially. Is he a millionaire? No, but he does have money sitting in the bank. So what does he do? He just goes out and pays cash for a $35,000 house, puts $10,000 into it and sells it for $65,000. He doesn't have to worry about paying a bank note while it sits, and more importantly, he doesn't have to try to get a loan from a bank. I've seen him do this several times in just the last year! (2012)
What if you don't have that kind of money?
Well, friends welcome to the US economy at it's present state. I own several pieces of real estate and have flipped successfully for going on 8 years now. But guess what? Banks are getting more and more frugal with their money.
The Days of the Good Ol' Boys are Gone!
I have bankers as friends, I've made strong connections with other banks I've worked with, and guess what? It's not up to them individually anymore! They would love to give you the money! They have to jump through a million hoops, present their case to the president, who in turn has to present it to the bank board, who then tries as hard as he can to make it as difficult as he can to give you the loan! Knowing people does not work very effectively anymore, and it just isn't the large banks I'm talking about. It is extremely difficult to get a loan through a small community bank for real estate as well.
What really ticks me off about banks!
I have great credit and have never been a day late with any bank note I've ever had. I can present them with a proposal, and show them on paper how a certain investment is fail proof, and they will do everything they can to dodge and discourage me! I have something that will make both me and you money, and you won't give me a loan for it!
It doesn't make sense€¦€¦.
But if I went to the same bank and asked for a $30,000 loan for a boat, I would walk out of there with a check today! How does that add up!
But can you really blame the banks when it comes to real estate investments?
Wait. When you start to think about it, why would they give you a loan? The economy is at a point where the interest rates are so low, trying to get people to purchase houses to live in (much less risky for the banks), why would they give you a loan at 3.5% interest, when they can simply put that money into a government bond of some sort and draw 5-6%? That doesn't make sense for the bank now does it.
So back to the original question?
Is real estate investing still as profitable today? In my opinion, yes, if you have capital. No, if you don't. There are ways to still invest in real estate without much money, but the profits are much more long term. I will discuss that in another article.
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