Thinking of investing in property? Do It now
All around the world, economies are finally starting to fully emerge from the global economic downturn that began with the subprime mortgage crisis in the U.S. and the ensuing real estate market collapse. Ever since then, major global economic powers have largely kept interest rates low in an attempt to spur growth, occasionally dipping into negative interest rates in some places.
Now that the global economic picture has started to improve, there’s a rare investment window opening for those with the financial wherewithal to take advantage of it. It’s an investment opportunity in real estate that is becoming available in locales all over the world, due to the intersection of several economic factors common to all markets. If you’re interested in making some money, read on.
Mortgage Rates Stable
As economies around the world have started to normalize after the long recovery from the 2008 financial crisis, their central banks have been raising benchmark interest rates back to historical norms. In the U.S., the benchmark interest rate has been slowly rising since 2015, reaching 1.75% as of March of this year. Experts predict that these small incremental increases in the Federal Reserve’s benchmark rate are going to start trickling down into the mortgage market in the very near future. The thing is, it hasn’t happened yet, and as of right now, the mortgage market in the U.S. has remained stable. That means there’s still time for investors to secure capital for property investments before it becomes prohibitively expensive.
Property Values Skyrocketing
While mortgage rates have remained stable in most parts of the world, real home prices have increased with few exceptions. It’s a trend that has been almost universal, and all signs point to it continuing in the next several years. If you research your mortgage options, you’ll realise that the real cost of paying off a property that is appreciating in value at current rates is still dropping on a daily basis. That means that smart investors that purchase an investment property now and lock in a still-available low interest rate can turn a profit almost immediately if they choose to hold a property for a short duration, and an even larger one if they’re willing to play the long game.
Capitalizing on Rental Trends
Rising property prices also hold another benefit for investors. The cost of purchasing a new home is changing the calculus for many families that are choosing between renting and buying, tipping the scales towards renting. For investors, this creates the possibility of building a rental property portfolio with little chance of losing money due to vacancies. It’s just another facet of the current real estate climate that’s working in favor of property owners. Renting a property out, when combined with low mortgage rates and rapidly rising home values dramatically increases the ROI of the home and makes the whole endeavor more worthwhile as an investment vehicle.
The Opportunity Won’t Last
As mentioned at the beginning of the article, the factors listed above have created a window of opportunity for savvy investors to turn a profit through a real estate play. Like all windows, though, it will be closed soon enough. The rising home prices and the likelihood of mortgage rate increases mean that the clock is already ticking for those looking to enter the market. It won’t be long before the costs of entry overtake the gains one will make when doing so. Once the market reaches that critical point, early investors will be counting their profits while everyone else remains on the outside looking in. If you’re an investor, the question you must ask yourself is which side of the market you want to be on when the window closes.