Most people are aware of the record-setting lows mortgage rates are chalking up right now—the kind of rates that create tempting cashflow projections for even the most conservative would-be investors. But, of course, other factors enter the decision, whether they are planning their real estate investment for their own residence or as a rental. Given the uncertainty in the economy, prospective buyers are asking themselves if now is the right time to be investing in real estate. We are seeing a plethora of buyers coming to see the markets that we cover (from Greenwich to the Berkshires) for both primary and secondary homes.
Bankrate.com, the popular investment site, just tackled that question. Its reasoned response: the answer is yes and no (but mostly, yes). “It’s hard to see such low rates and not reach for your checkbook,” was its understandable response. But even so, some time-honored qualifications remain.
The first proviso has to do with how long the investor plans to hold the property. If the answer is anything short of 5 years, transaction costs take a considerable bite out of the financial benefit—even considering the unusually attractive interest rates. For that reason, younger prospective homeowners in particular should consider if the property will accommodate a growing family. It may make sense to consider a larger property than is currently needed—particularly if these rarely-seen mortgage rates make it budgetarily sensible.
For others who are considering an investment in Greenwich as a landlord, the same considerations apply. On the other hand, for others who may be planning a “quick flip,” the unknowns in the economy could make that investment one that requires a heightened degree of caution. In most instances, though, if you are planning on holding the asset, if the cash flow projections make sense, the ‘yesses’ outweigh the ‘nos.’
Featured Image of this Post: Ethelwynde, the last remaining Great Estate of private residency in the Berkshires. 13 bedroom main residence with mid century guest house, set on 31 acres overlooking two mountain ridges. $5,900,000
