Are investors getting back into the real estate market?

[Springfield Chicken]

I just listened to a webinar about the "surge" of investors coming back into the real estate market and I'm curious as to what REAL investors have to say.  Our office now has listings that are so inexpensive that many of them can be rented out for more than the carrying costs, but we are seeing a trickle, not a surge of investors.  I'd like to hear from anyone who buys real estate properties as investments.  What are your thoughts on the market today?

[Dog Walker]

Springfield,  I already have several commercial properties and the money to buy more.  Commercial properties have fallen in value as much as residential properties and I would not buy a newspaper box right now.  Even at 1% interest rates my money is better off in the bank.

The carrying costs on commercial property are considerable and the demand for space is still falling.  Commercial space is as much overbuilt for the demand as is residential.

A lot of people are renting now rather than buying a house, but more are renting in newer apartment complexes than in single family homes.  Residential rental of small apartments and single family homes also involves you in other peoples' psychodramas and family problems.  Did that years ago and will never do it again.  Bitten once....

[MusicMan]

They are definately looknig, and some are buying. Just closed on 8 unit multi-family (1 bedroom units)
for $400,000 cash. The monthly rent generated was a bit over 1% of the purchase price.  I am thinking they will net 7-8% in the next year, without ever having to watch the stock ticker. 

[Springfield Chicken]

Dog Walker, I totally agree on commercial.  My husband knows that market and you are right.  Vacancy rates are way too high to have a comfort level for most investments.  On the other hand, residential rentals are picking up a lot.  Yes, you do get into dramas, but some of that can be turned over to a management company if you are willing to take less return.  I used to have a customer who bought rental properties by the handful and his rule of thumb was that if your gross rent each month was at least 1% of the purchase price you made money.  Right now that seems very doable.

[MusicMan]

I agree SC. There are lots of opportunities in residential investing. Are you seriously happy with 1% annual return on your money market/checking account? My investors are getting 1% per month (less taxes and ins) .........

[Dog Walker]

SC,  buying multi-unit apartments, even the smaller ones here in Riverside might make some sense if you assume that interest rates will not be going up anytime soon.  But at my age I hesitate to buy green bananas.