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I believe that real estate is still a good investment but there are requirements for success.
The current real estate market and the world are changing fast and in it’s current state, I would be cautious and watch the market to see what the trend is. If the real estate market continues to trend downward, I would wait until there is a sign of a bottom. The real estate market has trended upward very quickly for the last couple of years, it is more likely to level off or trend downward, so it would be safe to watch for awhile without the fear of losing significant gains.
There is a saying in real estate that the three most important features of any property are location, location and location and it is absolutely true. For example, an empty lot near a trendy downtown area is very often more valuable than a 5 acre lot in the suburbs. With this knowledge, one has to think where they will invest in real estate. There is lots of data on the internet about where the population is migrating in the US. https://en.wikipedia.org/wiki/Metropolitan_statistical_area.
I’ll use Austin Texas as an example since I live there. Real estate in cities that are shrinking would concern me. However, Austin, TX has had very significant and continuous growth for the last 30 years and it appears that it will continue. One has to evaluate the reasons for the growth, what is driving the growth and make their own decision if they think that market segment and city will continue to grow.
I own and manage several properties in the Austin area, primarily Round Rock, Texas. Samsung is currently building a microchip manufacturing facilities a few miles east of round rock which will provide hundreds of jobs and support business. We know that microchips are not going away any time soon and Austin has become a high-tech hub, as people flee California. With this information I believe that real estate in the Austin Texas area is still a good investment. The same real estate investment opportunities can be available for many other locations throughout the US, but each investor should take the time to judge their local market, measure the growth, determine the cause of the growth and decide if it is sustainable.
Real estate is one of those investments that can slowly make you rich, and it can also be done with someone else’s money. Real estate investments are not without risk and require owner involvement. Owners have to be prepared for tenants, maintenance and other issues. If a property owner is not interested in a hands on investment, it’s best to find another investment or to hire a property manager.
With a little bit of risk, a good mortgage, a growing location, a good profit margin between rental income and expenses and a good property manager, real estate can and should continue to be a good long-term investment but be prepared for some bumps along the way.