The Associated Press reports that U.S. home prices drop for 6 straight months. Jim Hitt, CEO of American IRA speaks about what this means to real estate investors while he offers a reminder that self-directed IRAs are an excellent tool when investing in real estate.
The Associated Press article goes on to report that the steady price declines have brought the nationwide index to its late 2002 level. Home prices have fallen 35 percent since the housing bust. The average price in Atlanta fell 17.3 percent in February compared with a year earlier. That’s the biggest annual drop in the history of any city.
Still, the article states that some areas are seeing gains in housing prices such as Phoenix and most cities are reporting smaller declines than in previous months.
This all leaves investors with many decisions to make. Some investors feel that they should only invest when they can buy at ‘rock bottom’ prices and sell ‘high’. Other investors look carefully at the overall trend of real estate in each area and determine what the realistic short-term and long-term gains are. While still other investors wait for a more stable market that provides them with less profit but more certainty in relation to potential profits. These investors are all looking to buy and flip the property or buy-hold-then sell the property.
There is yet another class of investors that like to ‘buy and hold’ real estate for current income…generally rental properties. When these investors like to purchase real estate varies; though all of these investors look carefully at these properties using calculations to forecast the monthly income, expenses, and ultimately profits. The caution here is to know the rental income averages for the area and to purchase the property correctly so that profits can be maximized.
Jim Hitt, CEO of American IRA, says, “Self-directed IRAs are a tool that savvy investors utilize. Purchasing real estate inside a self-directed IRA allows their profits to be tax deferred and in some cases tax free. There are many investors who ask my opinion as to whether now is a good time to purchase real estate or whether it is better to wait for the market to bottom out. After 40 years of watching the real estate cycle go up and down, my observation is that it is not the ‘bottom’ that is important. The important things is getting in at a good time. In this market, my opinion is that now is the time to invest in real estate. The key to every successful venture is to due your ‘due diligence’ before purchasing any real estate and to always use professionals, such as CPAs and Attorneys, to ensure that your interest is protected.”