You may be having a difficult time determining where to invest in the markets. The Dow Jones average has lost 8.22% in the last month, and it has a yield of 2.89% annualized over the last 5 years, and 3.6% annualized over the last 10 years. The 2 year U.S. Treasury bonds have a yield of .26%. Gold values have escalated with worries over the economy and the potential for long term inflation. Is there a better answer?
You may want to consider a real estate investment. The downturn in the real estate market over the last six years offers some interesting opportunities. More people are choosing to rent, values of properties have come down, and mortgage interest rates are at a 100 year low.
Rental housing in the U.S. serves a population of 39 million households, and among those under 25 years old, 78% are renters. The occupancy rate for apartments is 94.3% nationally, which is up approximately 3% in the last two years. Locally, we have had strong demand in the rental market, and recently, landlords have expressed their surprise on the number of calls from Craigslist and other advertising for available housing.
What kind of return can you expect from a residential or commercial investment? The net return on a cash investment in residential real estate is often 4-6% annually, and the returns for commercial real estate range from 6-8% annually in this area. Real estate investors often benefit from the use of leverage in their investments. Leverage is simply borrowing money, and utilizing less of a cash investment. The minimum down payment is typically 25% and may be greater depending on the investment strategy. With interest rates at historic lows, and the ability to “lock in” the rates for up to 30 years, investors will usually choose to minimize their cash outlay, and have the rents cover the payments on the loan.
Rents have historically increased over time. This adds to the long term return of investment real estate.
The other advantage to residential or commercial investment is the hedge against inflation. Like precious metals, hard assets have an intrinsic value and can act as a hedge against inflation. The long term appreciation of residential properties in the Durango, Colorado area has been about 6%, although there has been a negative valuation in the last few years. When appreciation returns to the market, long term investors may see a combined annualized return of over 10%, with rents and appreciation.
Investments in real estate should be considered as long term investments. Investors may want to consider holding real estate in their portfolio for multiple years.
If you have any questions about investing in Real Estate, please do not hesitate to call me. You can reach me, Don Ricedorff, at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 18+ years of experience, and he resides in Durango Colorado.He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
CDPE, Certified Distressed Property Expert
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His highest aspiration is spending time with his wife, Janet, and his three children Kelly, Katie, and Kyle. His other interests include playing tennis, fly fishing, hiking, boating, and water skiing.
You may want to consider a real estate investment. The downturn in the real estate market over the last six years offers some interesting opportunities. More people are choosing to rent, values of properties have come down, and mortgage interest rates are at a 100 year low.
Rental housing in the U.S. serves a population of 39 million households, and among those under 25 years old, 78% are renters. The occupancy rate for apartments is 94.3% nationally, which is up approximately 3% in the last two years. Locally, we have had strong demand in the rental market, and recently, landlords have expressed their surprise on the number of calls from Craigslist and other advertising for available housing.
What kind of return can you expect from a residential or commercial investment? The net return on a cash investment in residential real estate is often 4-6% annually, and the returns for commercial real estate range from 6-8% annually in this area. Real estate investors often benefit from the use of leverage in their investments. Leverage is simply borrowing money, and utilizing less of a cash investment. The minimum down payment is typically 25% and may be greater depending on the investment strategy. With interest rates at historic lows, and the ability to “lock in” the rates for up to 30 years, investors will usually choose to minimize their cash outlay, and have the rents cover the payments on the loan.
Rents have historically increased over time. This adds to the long term return of investment real estate.
The other advantage to residential or commercial investment is the hedge against inflation. Like precious metals, hard assets have an intrinsic value and can act as a hedge against inflation. The long term appreciation of residential properties in the Durango, Colorado area has been about 6%, although there has been a negative valuation in the last few years. When appreciation returns to the market, long term investors may see a combined annualized return of over 10%, with rents and appreciation.
Investments in real estate should be considered as long term investments. Investors may want to consider holding real estate in their portfolio for multiple years.
If you have any questions about investing in Real Estate, please do not hesitate to call me. You can reach me, Don Ricedorff, at The Wells Group 970-375-7014, don@frontier.net, or at my website at durangorealproperty.com.
Don Ricedorff is a licensed real estate broker in the State of Colorado, with 18+ years of experience, and he resides in Durango Colorado.He has numerous real estate designations, which have provided him with an unparalleled education to assist his clients. The designations include:
CRS, Certified Residential Specialist
CRB, Certified Residential Broker
CCIM, Certified Commercial Investment Member
CDPE, Certified Distressed Property Expert
ABR, Accredited Buyer Representation
GRI, Graduate of Realtor Institute
RSPS, Resort and Second Home Property Specialist
CIPS, Certified International Property Specialist
SRES, Senior Real Estate Specialist
He is also an active volunteer in the community and his church. His highest aspiration is spending time with his wife, Janet, and his three children Kelly, Katie, and Kyle. His other interests include playing tennis, fly fishing, hiking, boating, and water skiing.
1 comment:
Among the best investments for individuals looking for a good one to put in their time and money is property or real estate investments. Real estate license individuals mostly aim for these as they know how advantageous investing on the market is.
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