The decision to invest in real estate in 2019 may prove to be a great one if you have a lot of cash to invest with the economic predictions that some experts are making.
If you have a lot of cash and great credit then, according to some economic experts, you may be able to snatch up real estate deals in Westminster, Maryland for pennies on the dollar.
Experts predict a recession that is due in 2020. If after all, September of 2018 marks the 10 year anniversary of the collapse of Lehman Brothers, one of the world’s largest financial services firms before crash in 2008. To be more exact it was the fourth largest investment bank in the United States and its bankruptcy remains the largest ever.
To give you a practical application of how these predictions may be true let’s take a ride down south to a suburban city outside of the Dallas – Fort Worth Metroplex – a city called Frisco, Texas. Frisco, Texas is one of the fastest growing suburban cities just outside of Dallas, Texas.
It was voted the number # 1 Best Place to live in America by Money Magazine because it has a higher than normal job growth, high school graduation rates, relatively low crime rate, multiple professionals which seems, is overall a relatively new looking in shiny city with all the polish you’d ever want from an affluent area. Frisco, with all of its advantages, is starting to see a downturn in real estate prices. A
Could this be early signs of pending doom?
It’s anyone’s guess, but if this is true, and you have cash, you should invest in real estate in 2019.
As you may have heard, the best time to buy is when everyone else selling. Many investors sell when they panic and cash out of their investment. This is when prices drop and you can find real bargains in an investment market.
When people slow down on their purchase of residential real estate, sellers forced to drop prices to get out. This creates great opportunities to buy quality properties at deep discounts.
One investor I know of had cash ready for the 2008 financial meltdown and bought enough property to now be worth $100 million. Of course, as he would tell you he didn’t pay anywhere near $100 million for the property. He thought these properties at a deep discount when they were selling for pennies on the dollar and now rents them out at premium rates.
Of course, 99.9% of the people reading this article will not fall into the category of being able to accumulate enough property to be worth 100 million women next 10 years during one 2-3 year time period. However, if you can manage to get into one, two or three properties between now and 2020, you’ll be well on your way to building a successful real estate investment portfolio.
Let’s take a look now at some reasons why you should invest in real estate in 2019.
Reasons You Should Invest in Real Estate in 2019
real estate investing is one of the best ways to retire early and retire wealthy if you approach it correctly. Portfolio diversification is important for a solid nest egg for retirement.
You should have stocks in your investment portfolio, you should have mutual funds of different types, and you should have real estate. On the best strategies for a retirement that is secure is rental property investing.
What’s great about real estate investing is that because of the leverage factor you don’t necessarily need 30 years to build up a successful portfolio the way you do when you are solely investing in mutual funds. If you are in your 40s, 50s or even early 60s, you have plenty of time to accumulate several rental properties. But you should definitely start to invest in real estate in 2019 to get the ball rolling.
Retirement is a number not an age. When you reach the place where you have enough passive income coming in on a monthly basis that exceeds your bills, you can retire.
It said that in order to retire you need to be in a place where you can live on 4 percent of the value of your nest egg each year, inflation-adjusted, in order to live comfortably for 30 years.
So you have to consider your lifestyle, your level of debt and your entire economic picture in order to plan your prosperous retirement. If you start to invest in real estate in 2019 you could be well on your way to reaching your financial retirement number before most Americans retire – at the age of 65.
Hedge Against Inflation – Appreciation
Historically, real estate has kept pace with inflation, which is about 3 to 4% in year. This is the inherent, passive appreciation that you benefit from. If you’ve read other blog posts on this site then you know that we recommend investing in a property at no more than 40 to 60% of the ARV.
If you follow this proven formula then you will pretty much always make a safe investment that you see good appreciation on by making the right repairs and improvements.
Active appreciation occurs when you make improvements to the property in order to achieve maximum after repair value of investment of the investment.
One of the most powerful reasons you should invest in real estate in 2019 in the midst of your other investing activities is leverage. Leverage is the ability to use other people’s money to buy and control real estate.
For decades you may have heard people promoting no money down strategies to real estate investing, but the truth is most financers will want you to have some skin in the game. Whether we’re talking about traditional lending institutions, such as banks, private equity lenders, hard money lenders and others, most people you to put something up in order to take the risk of funding your deals.
When you rent properties, your tenants pay down the mortgage as you have on these properties. This is one of the greatest benefits of the rental strategy of real estate investing. Tenants pay down your mortgage loans every single month they pay rent to you, in addition to putting some money in your pocket to take his income if you have done the deal right.
Tax Shelter – Depreciation
Lastly, we will mention that there are many tax benefits that you gain by investing in real estate.
Now that we have mentioned some of the reasons you should consider investing in real estate in 2019, in the next part of this series we will discuss how to start investing in real estate in 2019.
If you would like help making your plan for a successful real estate investment track, schedule your FREE Profitable Portfolio Strategy Session here.