While the local housing market has not suffered to the extent of other areas, Louisville investors still have a tremendous opportunity to take advantage of the current situation. By purchasing investment homes now, a saavy individual can set himself or herself up with solid returns for years to come. Four factors are particularly favorable for investors right now. These include 1) an increased supply of homes, 2) an increased demand for rental homes, 3) low interest rates and 4) oncoming inflation.
"Be fearful when others are greedy and be greedy only when others are fearful." ---Warren Buffett
Despite low interest rates, abundant selection and $8000 first-time home buyer tax credit, many buyers are afraid to take action. Their paralysis has caused a small glut of homes in virtually every price range and area of Louisville. In Jefferson and Bullitt County, there are 4640 and 586 homes for sale respectively. March sales were 471 and 61. A balanced real estate market has 6 months of inventory, we have 9+. The excess represents opportunity.
The economy is creating renters. The last couple of years has seen a drastic increase in the number of Louisville households that have filed bankruptcy, sold their homes as a short sale or lost their properties in foreclosure. Under current lending standards, most of these people will be renters for the next five years. Additionally, a significant amount of people have credit scores which either no longer permit them to buy a home or have priced them out of the market. As callous as it may sound, their loss is your gain. Higher demand for rental properties means higher occupancy and rental rates.
Investment property interest rates are currently below the rates that many have their principal residences financed. Lower rates mean lower mortgage payments. Lower mortgage payments mean more cash flow. If you thought you had to pass that on, reread the previous paragraph.
Sooner or later, inflation is going to read its ugly head. The US Treasury hard-wired the printing presses in the on-position about 9 months ago and hasn't really checked on them since. When the time comes to deal with this demon, rest assured interest rates will rise. Besides feeling like a genius for buying when rates were low, you will have the added benefit of a larger rental pool as potential buyers are priced out of the market.
With these four factors working for you, the time is definitely right to buy an investment home. I monitor investment grade homes on a regular basis. Call me (502) 921-3989 and I'll help you get started.
Click the link to search the MLS for Louisville Homes
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Erik Hitzelberger is a licensed real estate agent with RE/MAX Alliancein Louisville. If you need a Louisville Real Estate agent please email me or call 502.921.3989.
I specialize in the following areas of the Metro Louisville Area: Jeffersontown (J-Town), Okolona, Fern Creek, Shepherdsville, Mt Washington, Hillview, Brooks and Pewee Valley. Click the following links to learn more about Louisville and Bullitt County Real Estate or to Search for Louisville Homes.
Good solid post. You make a goood case for investing in Louisville and Bullitt County.
Thanks Vickie. I believe in it enough that I put my money out there. Plenty to go around though.
Love this post Erik because you are surely showing your expertise in Real Estate. Not just "I can sell it quick". A homeowner in KY would be lucky to find you and utilize your knowledge to list/buy a home.
John - Thanks for the kind words. I truly believe buying investment properties is one of the best ways to build wealth right now. I hope this helps others get into the game while the best deals are still available.