From the moment the market bottomed out in 2012 until now, home prices have been on the up and up. Sale numbers are slowing down this year, but with inventories still much lower than their usual levels and buyer confidence at its highest level in years, home prices are on the rise. That’s good news for the country as a whole and for investors looking for fix and flip as well as buy-and-hold opportunities.
Add to that good news Trulia’s recent report on buying v. renting. Trulia has found that owning a home is still significantly cheaper than renting. With a 30-year fixed rate home loan of 4.5%, buying is 38% cheaper than renting on average across the nation. This isn’t the case in specific markets like San Francisco, but in general, people who can buy homes should.
Unfortunately, with the home affordability index at an extreme low, many Americans simply aren’t in a position to buy.
Depending upon the markets you’re most interested in, the buying v. renting issue can be seen as an argument for buy-and-hold investment or for fix and flip. Flipping houses remains a strong investment in high end markets where affordability isn’t really a concern and buyers aren’t slowing down. High end buyers know how much more cost effective it is to buy than rent, and house flipping pros are routinely making upwards of $100,000 on high-end flips in areas like San Jose, Sunnyvale, and San Francisco.
On the other end of the spectrum, buy-and-hold investors are finding that one to four unit homes in suburban areas near bustling cities are an excellent investment. While home prices are inching upward, rents are also on the rise, and people near or in major cities are willing to pay a premium. Middle-income renters who can’t quite afford to buy provide monthly rental income for buy-and-hold investors, and when it comes time to sell the property, these investors can expect to make an additional 5-15% on their initial investment.
Learn more about the current opportunities for rehabbing real estate in California by contacting ZINC Financial today at 559.326.2509. We offer a variety of loan programs for both novice and experienced property investors throughout the state of California.