Thursday, November 13, 2008

Falling housing prices bringing out investors


Housing prices in the Ann Arbor MI area have fallen to the point where many quality homes and condos for rent are able to offer a positive cash flow. Traditionally, lesser quality properties have cash flowed, but properties near the University of Michigan and in stronger areas produced a negative cash flow but offered strong price appreciation. Now investors are beginning to snap up properties that offer cash flow while they wait for prices to rise in the future.

Investors wading back into these troubled markets say they are buying for cash flow rather than for the quick appreciation that was possible in frothier times. Investors who can get a fixed-rate loan and find tenants to pay rent steadily can afford to hang on for a long time until housing prices rebound.

“You don’t wait for the bottom of the market,” Yates says of sale prices in the markets he’s investigating. “You wait till it makes sense.”

Nationally, existing-home prices in September 2008 were 9 percent lower than a year earlier, according to the National Association of Realtors. Several recent reports have shown home sales activity rising as buyers are lured in by falling prices. Even if prices continue to fall, many investors say they can wait for the market to rebound as long as they can get cash flow from renters. Newsvine

Rents for quality Ann Arbor condos and homes are remaining strong and demand seems to be rising as banks tighten up lending requirements making it harder for buyers to qualify.

For those with the cash on hand, this might be the right time to consider investing in quality rental homes and condos.



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