Have you ever thought about being a landlord? Or have any of your clients mentioned to you the possibility of investing in real estate? If they did, you certainly jumped at the opportunity and went shopping for possible deals on behalf of your new-found investor. But do you have other clients that might like to buy rental homes but don’t realize the potential?
Interest rates are at and have been at historic lows for quite some time. In fact, interest rates have been in the 3.50 percent range for a 30 year fixed rate loan for more than a year now. Yet what is often overlooked is that low interest rates are a benefit for real estate investors as well as for those buying homes to live in. When you couple the recent demand for rental housing with low rates, you can see how investing in real estate can make sense for most anyone if only they explored the opportunity.
It makes sense if you think about it for a moment. As mortgage lenders tightened up their lending standards five years ago, that left a lot of potential homeowners out of the market and forced to rent. That trend continues still today as loans are approved using common sense guidelines and gone are the “no income, no asset” loans of a few years past.
Home prices also appear to have hit bottom and on their way back up. The recent Case Shiller index showed that residential real estate values have not only bottomed out but are on the increase, with prices rising a respectable 3.35 percent from one year ago, and in some locations close to 10%.
When real estate values rise, it’s better to have a modest, gradual increase instead of an obvious price bubble and that’s what we’re experiencing today in the Greater Chicago real estate market.
More renters, low rates, and price appreciation. Does that sound like a good combination to you? Will it sound good to your client base? You bet it will.