“The sky is falling, the sky is falling!” Seems like everywhere you turn, the media wants you to believe that now is a terrible time to buy real estate. Nothing could be further from the truth. Now is an opportune time to buy West Palm Beach investment property, for a number of reasons.
First, prices have come down dramatically, particularly in “bubble” markets like Florida, California, Arizona, and Las Vegas. In West Palm Beach and the Treasure Coast area of Florida (which includes Martin, St. Lucie, and Indian River Counties), areas where I actively invest, prices have come down by more than 50% in a lot of cases! To give a quick example, I was looking at West Palm Beach investment property today. It was a foreclosure listed for $50,000, but 18 mos. ago, that very same property was purchased for $210,000! That’s unbelievable! Think about it, that’s a discount of a whopping 76% off of the price the very same property sold for less than 2 years ago. That’s one heckuva a sale! Try looking for 76% off the next time you go shopping at the mall.
Second, along with significant drops in price, we have seen the return to a more normalized market where single family homes can be purchased as a real estate investment and rented out for enough cashflow to cover the costs of holding the property. While this is nothing new for many parts of the country that never experienced a price bubble, for real estate investors in places like West Palm Beach, this is extremely good news! A couple of years ago, there was no such thing as West Palm Beach investment property that cashflowed.
Today, though, you can cashflow many properties at the reduced prices present in today’s market. [A quick aside – many West Palm Beach area real estate investors say they like to buy property at a price that supports the 1% rule, meaning the amount the property can rent for accounts for at least 1% of the purchase price of the house, e.g. a house that rents for $800 can be purchased for $80,000 or less. There are plenty of South Florida and West Palm Beach real estate investment property deals out there like this right now.]
On a similar note, another effect of the drop in housing prices is reduced costs for property taxes and insurance. Both taxes and insurance costs are based upon the value of a property. So, it stands to reason that since prices have fallen, the costs will be less.
In the case of property taxes, the assessed value on West Palm Beach investment property dropped last year and will do so again this year. In addition, local governments have been forced to lower their tax bills in line with tax reform on a state level. The bottom line is that real estate investors will pay less property tax today than they would have on the same property a couple years ago.
Likewise, a reduction in prices means that a real estate investor does not need to insure his property for as high a value. Thus, insurance costs are coming down on West Palm Beach real estate investment properties, as well as in other parts of South Florida.
Taking all of these factors together, now is an ideal time to purchase West Palm Beach investment property. While prices may not have bottomed out just yet (I expect that will happen later this year), by buying at prices that cashflow, investors will be in a good position when the market rebounds.
The danger in waiting for the bottom is that you will miss the boat. By definition, we won’t know we’ve hit bottom until prices have started to rebound, and by that point, they may have rebounded to levels higher than today.
Like investing in the stock market, remember, it’s all but impossible to buy at the very bottom or sell at the very top, but if you can buy within 10-20% of the bottom and do the same when you sell, you’re in great shape. Plus, by purchasing West Palm Beach investment property that cashflows and leaves an investor with some extra monthly profit after expenses, you’ll be able to continue to hold the property for as long as you like.
Why Now is a Good Time to Buy West Palm Beach Investment Property
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