Well it’s still a seller’s market out there but buyers have a fighting chance to make a very good long-term decision in real estate. Do not be discouraged. The market is shifting to your benefit. It won’t be a buyer’s market per se but it will be an opportunity for you buyers to move in 2019.
Featuring:
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Bob Nelson: Well let’s take a look at my side of the ledger. You do residential and I do income properties, properties that are purchased for rental purposes and for those that are in the market for that sort of thing, the market has really started to change.
We’ve got rent control. We have interest rates that are very stable. In fact not only stable, they came down aways, which suggests that if you’ve got a particular size down payment, you can afford to buy a more expensive asset than you were able to do say three months ago. That’s a very positive thing, but you got to know what you’re looking for and you do have to move quickly, absolutely quickly, when you see what might fit.
Marcia Edwards: So Bob, isn’t it just a matter of math? When it starts to make sense financially, you do it when it comes to investment commercial?
Bob Nelson: If they knew what they were looking for and that’s a particularly important point that I really want to make, you can look at an investment property as having four benefits, measurable benefits.
Cash flow that the property is capable of producing and that certainly is not just a function of the property. It’s also a function of interest rates that are available. If a lower interest rate allows you a higher cash flow.
The second benefit is tax shelter. Frankly, that’s not as important as it used to be because depreciation has been cut back and so forth.
The third one is the principal reduction and the fact that you can use a large mortgage to purchase a parcel of property and that large mortgage as it’s paid off monthly by the tenant making a payment. If you exist long enough, you’ll own it free and clear.
The fourth one is the real carrot that’s in the game. It’s called appreciation and equity. Appreciation and value causes your equity to grow and at a fairly good rate.
Now there’s a fifth benefit that most people don’t particularly consider is psychic income. Psychic income is when a property is tangible. You can drive your neighbor by and say see that? I own it. That’s a benefit.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30 on KPNW for the “Real Estate Today” radio show.
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