Most everyone would agree that they want a comfortable retirement. Many work hard their whole life to ensure these years are both secure and enjoyable. But achieving financial independence and stability can come through many different revenue streams, one of which is real estate investment. Although there will always be risks involved with real estate, those who play their cards right have found it to be a very fruitful source of income in retirement.
Tips For Success
Should you decide to invest in real estate, it’s advised that you polish your skill set so you can set yourself up for success. Here are some practical and accessible tools to aid in that endeavor:
- Be realistic about your skills and portfolio. If you have no prior experience investing in real estate, know your limits and start humbly. Choosing your first investments is an important step in the process so you don’t get in over your head. Should you have connections in the real estate business, don’t hesitate to reach out to them.
- Read books on real estate investing written by experts. It’s always a good idea to be well-read when investing a considerable amount of time and money into something.
- Location matters. Familiarize yourself with the area you’re hoping to buy in. Know the regions that are popular because they will continue to be in high demand even when the economy takes a turn or slows down.
Benefits of buying multiple properties
If you feel inclined to invest in real estate, there are several benefits to buying multiple properties rather than sticking with just one. A Real Estate Investment Trust, commonly abbreviated to REIT, is “an investment in a collection of properties or other real estate assets.” These REITs have a special tax status, requiring them to pay at least 90% of their income in dividends. While some REITs are risky, most are very safe and a great option for retirees who can very easily gain real income from dividends. Moreover, the process of buying an REITs is trouble-free and simplistic.
Different tax implications
There are many pros to buying an REIT, such as the substantial income they offer, but realistically, dividends are still subject to taxes (and are often taxed the same way as regular income). However, on the whole, REITs are hands-off as you do not have to be inconvenienced with property management. It is low-maintenance investment.
Beefing up diversification in your retirement plan
Diversifying your retirement plan is both an informed and intelligent decision. REITs allow many freedoms, one of which is the ability to buy multiple properties, reducing risk overall and naturally expanding your real estate portfolio.
Some may consider real estate investment for your retirement a bit of a gamble. And at times, it certainly fits that description. It takes guts to enter into something that doesn’t always have a fixed outcome, or poses significant challenges along the way. But when done wisely and with the right amount of patience, investing in real estate can be one of your most solid sources of income for retirement.
Market Still Hot in May
The real estate market began with a bang in 2019. In similar fashion to 2018 and the First Quarter of this year, things have stayed hot in Quarter 2. The good news for homeowners is prices are not appreciating in the same way they did in 2016. This is especially promising due to the current prominence of low mortgage rates. Overall, things are not on a downward trend as was once predicted for the majority of 2019.
Despite trends and forecasts predicting a slowdown by midyear, May was the brightest month of 2019. Detached single family homes are still performing the strongest, while condo markets are showing a slowed pace. This trend has been bringing down the combined average market slightly, but not by a significant amount.
As for specific statistics in May 2019, houses were on the market for an average of 31 days, with a median of 10 days. In May 2018, houses were on the market for an average of 29 days, with a median of 9 days. There was a grand total of 965 houses sold in May 2019, with the median selling price rounding out at $455,000.
Plunging Mortgage Rates
More homes went pending in May 2019 than May 2018, and although we can’t say for sure, a reason for this year’s increase in pending homes may be the descending mortgage rates. Ultimately, this has empowered buyers to buy while rates are low, which is something many have capitalized on.
June Follows Trend
Once June rolled around, we expected there to be a slowdown, as July and the majority of the summer is generally a slower time for Portland. However, with low mortgage rates and a solid job market, people in the Portland area continued to buy homes. Since everyone seems to be capitalizing on this pattern, the only challenge that remains in Portland is lack of inventory to support the high interest in buying.
In June 2019, houses were on the market for an average of 29 days and a median of 12 days. As for June 2018, houses were on the market for an average of 27 days and a median of 10 days. There was a grand total of 927 houses sold, with the median selling price hovering at $432,000.
We are all excited about the Portland housing market and how it has kept us on our toes this year. With stats not yet released for July, we anticipate a slowdown, as real estate is highly seasonal and less busy during the summer months. However, we fully expect the market to remain steady. It’s safe to say that while mortgage rates remain low, we’ll be keeping a close eye on the market as the fall season approaches.
For the first time in many years, mortgage rates are dropping, making it an ideal time to buy a home or refinance your current one. Ultimately, this shift has created a massive surge in refinance activity, with a 27% increase in refinance applications, the highest in three years. While experts predicted an upward trend for the majority of 2019 after peaking at 5% last November, rates have stayed low, with the 30-year-fixed mortgages dropping as low as 3.82% nationally. However, things are always subject to change.
Knowing If You Should Refinance
Those most impacted by this shift in the market are homeowners eligible for refinancing. According to Reuters, this is roughly 6.8 million people in the United States, of which a significant amount are new homeowners (as of the last 12 months). According to Black Knight, a mortgage analytics data company, borrowers could save up to $268 a month by refinancing. While things have been changing rapidly and some homeowners may want to seize the chance at refinancing, a general rule of thumb is to wait until they drop a full percentage point before making the jump. For many homeowners, this could mean saving thousands of dollars per year, especially in heavily taxed areas in the U.S.
Those Already Taking the Jump
South Carolina, Texas, Tennessee, California and Illinois have all seen a steady rise in application activity, with spikes beginning as early as April of this year. Reuters also reported that a significant percentage of millennial buyers are doing cash-out refinancing, meaning homeowners remove a portion of equity from their home while adjusting their loan rate. However, experts recommend this only if it’s used towards something worthwhile, like college tuition or investment properties (not vacation or something similar).
10, 15 and 30 Year Fixed-Refinance Rates
As of June 19th, 2019, numerous refinance rates continued to recede, which includes 10, 15 and 30-Year Refinance Rates. That means now is still a prime opportunity to refinance or buy a home for many people. As for specific figures, the 30 year fixed-refinance rate is down to 3.97%, meaning you’ll pay $475.69 per month in principal and interest for every $100,000 you borrow. The 15 year fixed-refinance rates has now decreased to 3.23%, meaning monthly payments will cost around $702 per $100,000 borrowed. While it may initially present a challenge for your monthly budget, there are advantages, including saving money over the life of the loan and building equity very quickly. For 10 year fixed-refinance rates, the average has gone down to 3.24%, with monthly payments sitting at $978.12 per month. While this is a whopping monthly payment and commitment, you will still pay less interest over the life of the loan as compared to a 15 year fixed-refinance loan.
Where Are Rates Headed?
It’s difficult to say if these downward trends will continue, as this market is susceptible to change all the time. However, it may be in your best interest to refinance now while rates remain low. And as always, it’s recommended to stay in tune with rates at all times so you can make the best decision possible as a homeowner.
After a cooling period in the final months of 2018, things began to heat up for the North Portland Housing Market in the first quarter of 2019. While January 2018 was busier than January 2019, there was still a fresh start to the year and welcome change after the traditionally slow holiday season. In terms of numbers, January and February performed similarly and ultimately proved to be encouraging to buyers, especially as March drew near. The housing market stayed hot throughout March, foreshadowing a pattern likely to continue through the remainder of the year, all of which will largely depend on mortgage rates.
Despite the downward trend during the fall season, December was a productive finish to the year for the Portland housing market. One contributing factor was an increase in interest rates. December is typically the slowest month for real estate, but rates spiked, leading many to rush and buy to lock in the rate before prices got too high. Below is a breakdown from the fourth quarter of 2018 and some insight into 2019.