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Now Is The Time to Invest in North Georgia Real Estate - Realty Times

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As an investor, have you ever thought to yourself: Gee, I wish I had bought that stock a couple of years ago, when it was so cheap?

Well, Ole Oleson, whose Costa Mesa, California company manages 5,200 rental and apartment units, says 2008 is one of those, "I wish I had bought back then" opportunity years for single-family rental home investors.

With fire-sale prices at auctions in southern California -- and banks begging buyers to take defaulted houses off their books -- Oleson, who is president of American Management Company, says this is one of the best times in 30 years to begin assembling a rental real estate portfolio.

Even if prices drop a little more during the next 12 months - and Oleson thinks they will in California - today's low interest rates may not be around when prices finally flatten out.

But attractive as market opportunities may be, Oleson warns that there are lots of pitfalls for investors in too much of a rush. Here's his advice:

Number One: Avoid the temptation of snapping up condo units that are being dumped by speculators and developers. "Condos are troublesome," he says. Your fate and rental income are too tied to the entire building or project itself, condominium or homeowner association policies that can change overnight -- and you're never fully in control as you are in conventional detached, single family houses.

Number Two: Stick with modest-sized, well-located units that appeal to households who' d really prefer to own a home themselves, but can't afford it for one reason or another. Not only are moderate-sized properties easier to rent, but they can be repositioned and upgraded for eventual sale to tenants under lease-to-buy arrangements once the for-sale market bounces back a few years down the road.

Finally: You've got to do your "due diligence" -- intensive research not only on a property before buying it from a bank or at auction -- but on your prospective tenants.

You've got to pull credit files and run credit scores. You've got to check and verify income and assets and prior rental histories before signing a lease with anyone. You can't allow surprises in the rental business, says Oleson, because once tenants are in your house … they can be very hard to get out.

Investor Report: The Year to Invest
by Kenneth R. Harney

Published: February 22, 2008

Use of this article without permission is a violation of federal copyright laws.


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Ignore the Headlines

Expect a Summer Rise in Home Sales


Daily Real Estate News | May 7, 2008
Expect a Summer Rise in Home Sales

A flat pattern in home sales activity should continue for the next couple of months before improving over the summer, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.

Lawrence Yun, NAR chief economist, said the extent of an expected recovery hinges on better access to affordable loans. “Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas,” he says. “As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half. Some time is needed for FHA and new conforming jumbo loans to become widely available.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, edged down 1.0 percent to 83.0 from a downwardly revised level of 83.8 in February, and was 20.1 percent lower than the March 2007 index of 103.9.

NAR President Richard F. Gaylord says additional costs in many markets are hindering a recovery. “Our members are telling us that more buyers are looking at homes but are slow in signing contracts, and that’s contributing to the weakness in pending home sales,” he says. “In many cases buyers are waiting for greater access to affordable credit, especially in higher cost areas, but some are disappointed with what appears to be unnecessarily restrictive lending requirements. The good news this week is there is some discussion toward relaxing some of the burdensome lending practices.”

The PHSI in the Northeast jumped 12.5 percent in March to 80.8 but remains 15.4 percent below a year ago. In the South, the index slipped 0.1 percent to 84.9 and is 26.7 percent lower than March 2007. The index in the West declined 1.4 percent in March to 91.2 and is 9.5 percent below a year ago. In the Midwest, the index fell 10.4 percent in March to 74.1 and is 22.3 percent below March 2007.

Existing-home sales are projected to rise from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter. For all of 2008, existing-home sales are likely to total 5.39 million, and then rise 6.1 percent to 5.72 million next year. “Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied,” Yun says. The median price is forecast at $213,700 this year before rising 4.1 percent to $222,600 in 2009.

Some areas already are seeing sales increases, underscoring that all real estate is local. In March, unpublished snapshot data shows sales in Bakersfield, Calif., and Jackson, Miss., were higher than a year ago. At the same time, price gains were noted in markets such as Buffalo-Niagara Falls, and Cedar Rapids, Iowa.

On May 13, NAR will report first-quarter data on metropolitan area home prices, covering about 150 metro areas, and state home sales. “Although some market adjustments are necessary, a downward overshooting of the housing market would cause unnecessary loss in economic output, income, and jobs,” Yun says. “It is critical to stimulate housing demand by inducing fence sitters back into the market. A home buyer tax credit on any home purchase would accomplish that.”

Here are some highlights from NAR's report:

New-homes. Sales of new homes are expected to fall 30.9 percent to 536,000 this year before rising 10.1 percent to 590,000 in 2009. Housing starts, including multifamily units, will probably drop 29.5 percent to 955,000 in 2008, and then rise 1.3 percent to 967,000 next year. The median new-home price is estimated to fall 3.7 percent to $238,000 this year, and then rise 5.4 percent in 2009 to $250,900.
Rates. The 30-year fixed-rate mortgage is likely to rise gradually to 6.2 percent by the end of the year, and then average 6.3 percent in 2009.
Affordability. NAR’s housing affordability index is expected to rise 10 percentage points to 127.0 for all of 2008.
GDP. Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.3 percent in 2009. The unemployment rate is projected to average 5.3 percent in 2008 and 5.5 percent next year.
Inflation. Inflation, as measured by the Consumer Price Index, is seen at 3.4 percent this year and 2.2 percent in 2009. Inflation-adjusted disposable personal income is forecast to grow 1.2 percent in 2008 and 3.0 percent next year.

Source: NAR


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