1031 Exchange Expert – Steve Rosansky – Nine reasons to Buy Investment Real Estate Now
I’ll do a real quick summary of his points then link you directly to his article.
1031 Exchange Opportunity – Exchange one property with a low basis for another or more better performing or located properties. I might also add that while capital gains rate is still at the 15% maybe it’s better to cash out and pay the tax. Remember that the Bush tax cut extensions were for only two years and if by chance the Democrats win the presidency and the house back in 2012, the 15% rate is very likely to increase.
Attractive Purchase Prices – There are still deep discounts to be found on certain property classes in secondary and tertiary markets. New or newer single tenant, single parcel, major market, national credit retail is real hard to find right now because of the dearth of new construction over the last 2 ½ years. Maybe shopping secondary or tertiary markets or another product class would be in order.
Historically Low Financing Costs – QE 2 has resulted in interest rates lower than we’ve seen in a while giving the buyer the opportunity to goose their cash on cash return.
Inflation Hedge – Real Estate can provide a hedge against the declining value of the dollar or frankly, any currency. Plus ownership of leased property can provide an additional hedge as rents tend to increase during inflationary periods.
Yield – Conservative investments such as treasuries or money markets are paying very low yields right now and carefully selected investment real estate can perform in the 7-10% range
Less Competition – I disagree with Steve a bit on this one. I think it has gotten quite competitive on the right product class in major markets – thinking single tenant, single parcel, major market, national credit retail.
Desirable Product Classes – Major market multifamily and single tenant retail are real hot right now.
Worst Price Declines are Over – Most analysts think that we’ve passed the worst and prices are stabilizing and in some cases rising. I think this is especially true given how little new inventory is in the pipeline. Its the free market and supply v. demand.
Real Estate is Local – Investors are aware that all real estate is local and supply/demand and investment returns are determined by local market conditions.
Steve Rosansky – API Newsletter – 9 Reasons to Buy Now