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Is buying property and holding it a good investment idea?

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February 26 2011 - US
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Answers (17)

Buying property and holding it can be a decent investment over the long haul. A lot of that will depend on the area some areas of the country have more voliatile prices than others so timing can affect your overall return. If you buy and pay cash that is the best way to keep the "overhead" of the property lower. Keep it leased out and it will help you obtain a good return on your investment and return some of that locked up cash to you monthly. Keep in mind the cost of ownership including taxes, insurance and maintenance.

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March 05 2011
Single fam not worth it only to fix and flip. Multi family is a keeper If the Income is good. 3 fam 4 fam. 

GL.

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March 01 2011

Purchasing and holding a property can be a good investment. You should consider the 2 sides of the investment: 1. the income stream....  if the property is purchased at the right price, in the right location and improvements can be made to increase  leasing income stream,  maintenance cost are kept low, and you are able to make a profit at the end of the month after expenses.....  thats a good investment (*everyones IRS" right off / deduction" needs and "rate of return on investments" reqirements may vary)  2.  the profit at the time of sale.... estimate the time of  holding the property (7-10 years minimum) and estimate average appreciation for the area. Calculate the capital gains tax and the rate of return on the investment.  For more detail seek out a real estate professional and accountant in your area for more help.

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March 01 2011
Profile picture for SteadyState
The graphic bellow says it all (follow link for original source):
Cshpi-peak.svg‎ (SVG file, nominally 300 × 310 pixels, file size: 12 KB)
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March 01 2011
It is if you buy right.
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March 01 2011
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Katup,

Get the next (March 5th) issue of "the Economist." You will find an interesting report in it.
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February 27 2011
Vince:

Lets see:
1. taxes.
2. insurance.
3. maintenance.
4. vacancy.
5. opportunity cost on your $100k.
6. reconditioning after acquisition to get it ready to rent.

Please, rather than post stuff that makes you look clueless, learn how us real investors think about it... Not saying a 100k home that rents for $1400 couldn't be a good deal, but your RIDICULOUS post left out almost all of the analysis needed to even begin to evaluate it.
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February 27 2011
Now may be the best time to buy an investment property. If you can purchase a home at the bottom of the market around $100,000 and take advantage of the hot rental market and get $1400/mo. That's a 1 year return of $16,800, can your savings account get you that return? Not to mention you... have an appreciating asset because you bought on the bottom
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February 27 2011

Unlike the other agents here, I'm going to give you both sides of this question.

Owning a rental home is a horrible investment if you have no clue what you're doing.  Things WILL go wrong, and your agent will long be gone when you get calls about your tenants being loud and disturbing the peace. 

But if understand that you WILL get calls from time to time, if you have a long holding period (10 years or more), and you're OK renting the home every couple of years, you'll do great.

As a sidenote, I own rentals and I've never recieved the dreaded "3:00 AM" toilet-overflowing call.  It just doesn't happen.  But I have had units destroyed...people just don't respect rentals.  Nothing surprises me, and my strategy has always been to buy in strong neighborhoods that people HAVE TO live in, whether it be because it's within close proximity to a college, a train, or work.  The units will always be full, there'll always be investors wanting to buy, and you'll never have to worry about liquidity. 

I never prefer crummy locations at cheap prices (they're cheap for a reason).

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February 27 2011
It's hard to find a better investment than real estate, especially right now while the prices are so low.  Your tenant will either pay for the property for you and/or give you a nice cash flow.  I'm selling properties right now that give 20-25% return per year just from the rents.  That doesn't include the returns from future increases in value (that will happen just due to inflation over time) and the tax benefits of owning rental real estate.  The IRS lets you depreciate the property on your taxes and write off all expenses and maintenance of the property.  And if you keep it all your life and leave it to your heirs they will receive the property with a current market value basis which means they could sell it and pay no capital gains taxes on the increase in value.  Right now the average price of a home is the same as it was 10 years ago due to the current economy but it is still almost 3 times what the average house cost 30 years ago and 7 times what the average cost was 40 years ago.  Many smart investors are purchasing rental homes at these low prices we have today and they will see large returns on those purchases in the future!
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February 26 2011
Consider the fact that most millionaires (80% or more) created and/or hold their wealth in real estate!

[Self-promotional content deleted by Zillow Moderator]

Continues success,

Marco Santarelli
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February 26 2011
The answer is a simple "YES".  Home affordability is high right now.  Whether you live in it or rent it, do it now
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February 26 2011
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There are lots of costs to owning, maintaining, and selling properties, so it really depends on what you will be using the property for in the interim, and whether that pencils out, especially considering that anything purchased today can likely be purchased for less 2 years from now.

Besides, are you going to "leverage" your money to buy?  In other words, are you just going to throw money away on interest?  In a declining market, it is a good way to set yourself up for foreclosure, bankruptcy, and declining net worth.  The only ones that recommend such things are the agents that get a commission off of your folly.

And remember, you can't take your property with you when you die... so what are you going to do with it?  Give it to the State as done by William Randolf Hearst?
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February 26 2011
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Over very long periods, house price appreciation (S/M Fam residential, not meant to be non-owner occupied) has averaged between 0.4 and 0.7% over the rate of inflation. 

That is a terrible investment return, outperformed by both stocks and bonds over that same period.

Hope this helps.
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February 26 2011
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Take a look below. It shows what happened to house prices since 1890. Inflation adjusted house prices remained fairly constant until the recent bubble. In short as an investment buying a house for appreciation is a losing idea compared to most other investments over time.

Do you know what the housing bubble really looks like? ... - Zillow Real Estate Advice

Peter Schiff: Here's Why Home Prices Have To Decline At Least 20% And Probably More

The Fallacy of a Pain-Free Path to a Healthy Housing Market - Economic Letter, December 2010 - FRB Dallas<--- the federal reserve who prints the money

The site below gives a prediction for what house prices will do. Most areas are still going down.
http://www.housingpredictor.com/

Historically house prices have appreciated about 3% a year. Care to guess what inflation was? Add in taxes, insurance, maintenance and no profit is really gained.
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February 26 2011
Buying property can be a great long term investment whether a personal residence or investment property. There are many bewares that a buyer can learn and reduce their risk upon in order to significantly reduce their risk on property ownership.

But in order to be successful, one must understand that real estate is hard work, time consuming and things generally cost more, and usually a LOT more, than a buyer anticipates.

So learn the process, the risks and bewares, and buy for the long haul and you should do okay.
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February 26 2011
You will get many, many different answers to this one. Historically property has appreciated over time at about 3%. This has made investment in property a good strategy in principle.

However there have been big raises and dips in property value over the years so it is not a good short term investment nor is it very liquid.

In places with strong inflation, property will tend to rise with inflation but will generally lag behind.  Investing in property is considered a good strategy in places with strong inflation.

Owning a home free and clear (no debt) is, in my view, a very good strategy because your cash flow at any one time is reduced to basic costs such as taxes. In homestead states such as Florida, laws protect your home and make the taking of your home by lawsuits and similar much harder.

Best to consult a local attorney and Realtor where you live because they will be able to advise you of the best course of action.
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February 26 2011
 
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