5 Reasons Now’s A Great Time To Buy A Minneapolis Duplex
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With the challenging economic news in recent weeks and months, it may be tempting to decide to wait for the real estate market to crash (which isn’t going to happen) or interest rates to drop before investing in a property.
Ironically, by doing that you may be missing out on a great opportunity.
Here’s 5 reasons why:
- Buy on cash flow, not the interest rate – When buying an investment property, the only numbers that matter are the cash flow and cash on cash return. While low interest rates certainly helped many more properties make financial sense (especially 2-4 unit buildings), it does not mean they can’t or won’t now. It may simply take buying an investment at a different number.
- Housing Shortage – By all accounts, the United States is experiencing an unprecedented shortage of housing; both in terms of inventory for home owners and for tenants alike. While numbers seem to vary , it is estimated we are 4-5 million short in single family homes. And according to the National Low Income Housing Coalition, Nationally,there is a shortage of 7 million affordable and low-income rental housing units alone. Locally, the Twin Cities has the worst housing shortage in the nation. As a result, there will be high demand for rental units for years to come.
- Rent Keeps Pace With Inflation – A persistent housing shortage, combined with upward pressure on expenses, will result in rents going up to keep pace with costs and demand.
- Less competition. While the data has yet to reveal it, higher interest rates have resulted in many would-be buyers either not being able to spend as much for a property, or eliminated them from the market altogether.
- More sellers, more balance. Over the past few months, the amount of inventory on the Multiple Listing Service has gradually increased. That, together with higher interest rates have caused the market to begin to shift slightly in buyer’s favor. While this does not mean duplex sellers will let go of their properties for 50 cents on the dollar, it may mean a buyer may now be able to write an offer contingent on inspection, use a FHA or VA loan, or even ask for a repair or two.
If you’re thinking of selling, or would just like to know how the numbers work, give me a call.