Taking a Look at Investing in 2015
The key word for Arizona’s Real Estate Market in 2015, would be stable. That’s a word we haven’t been able to use in Real Estate in quite some time. According to the Home Buying Institute, “Inventory levels are normalizing. Housing markets are normalizing.” We’re seeing steady growth year by year, limiting the amount of risk involved in Real Estate Investment here in AZ. Our projected population growth in 2015 is at 7%, a steady enough increase to ensure housing demand, and not cause a bubble burst like we saw in 2008 and 09. Michael Orr, author of “The Cromford Report”, called 2015 a buyer’s market, thus making it a great time for investors to take advantage of still distressed property, and seller incentives. The specific strategies we’ll take a brief look at today are; the rental market, for buy and hold investors, the distressed property market for fix and flip investors, and a Self-Directed IRA strategy for those looking to increase Retirement funds.
(Read more:http://www.homebuyinginstitute.com/news/2015-home-price-forecast-565/#ixzz3NJwNYdjc)
First let’s examine the outlook for rental property. With 80,000,000 millennials moving out of their parent’s homes, the new generation will create an extra demand for rentals in 2015. (see second link for millennial housing graph). Additionally, many ex-homeowners are still re-building credit while renting, and the baby boomers are downsizing to manageable rental homes while liquidating assets for retirement. “A July report from ASU’s W.P. Carey School of Business cited a 7.5 percent rise in residential rents over the past year in metro Phoenix.” With three generations either not ready for, or steering away from home-ownership, 2015 is a great time to invest in buy and hold real estate.
(http://www.rclco.com/pub/doc/presentation-2014-09-29-uli-capital-markets-millennials-real-estate.pdf )
Moving on to what interests you Fix and Flip investors…. According to a new Realtor.com report, Arizona is one of the "10 hottest housing markets to watch in 2015." Although our overall appreciation year over year has decreased, the margin is still there, and this is actually good news for individual Real Estate Investors. Smaller margins, and less distressed inventory means the big dogs have pulled out of Arizona and on to other markets that feed their greed. This leaves the door open for individual investor opportunity, without stiff competition. Without the Hedge Funds etc. competing, it allows for lower purchase prices.Buying atTrustee Sales, Wholesale or bank owned property will leave you with the margin you need to rehab and profit.
So, now that we’ve looked at the obvious investment opportunities, let’s take a look at one you may not have considered; Seller Carry financing with your Self Directed IRA. We talked about stability earlier in this article, and this is a strategy that allows just that. While you’re evaluating your investments going into 2015, take a look at your Retirement accounts, whether they be 401K, IRA, or REIT, you can roll them over into a self-directed account. This allows you to purchase Real Estate with it at your own discretion. So what was I talking about in terms of stability? One option is to purchase property with you SDIRA, and list it as seller-financed. This allows you to be the bank and set the percentage terms. Want to make 9.5% instead of 2 this year? Then set the loan terms as such. Secure a buyer, collect 10-20% down, and watch your income percentage stabilize at almost 5 times the amount. There is very little risk associated with this approach, and it is completely passive income.
So there you have it, Arizona is looking great in 2015 for buy and hold, fix and flip, or seller carry financing. Here’s to a profitable year! Happy Investing!
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