Why You Should Buy a Rental Property
March 14, 2011
Blog, Economics, Foreclosures, General Investing, Investment Properties, US Real Estate
Ackman argues that Single Family Home Rental Properties possess the identical investment attributes that strongly performing stocks typically possess. Says Ackman:
We believe we’ve identified an investment with:
- A low valuation – The lowest valuation in at least a generation.
- Forced sellers – A large number of distressed transactions.
- Extremely attractive financing available – High loan-to-value, low-rate, fixed-rate, long-dated, non-recourse debt, pre-payable without penalty.
- Favorable long-term supply dynamics – Short-term oversupplied market, but long-term supply is controlled.
- Favorable long-term demand dynamics – Demographically driven demand growth.
- Out-of-favor – Currently, this is a somewhat shun asset class.
Ackman’s bullish perspective flies in the face of the pervasive pessimism about home-buying. “Experts Say Housing is a Lousy Investment and it Always Will Be,” an August 2010 headline on Yahoo! Finance declared. “The US Housing Market is Headed for a Complete and Total Nightmare,” another financial news service predicted. And just last week, a CNNMoney.com headline warned: “Why Home Prices Could Fall Even More.”
“There’s a substantial risk of home prices falling another 15%, 20% or 25% more,” chimes in Robert Shiller, a Yale economist and half creator of the Case-Shiller Index of home prices.
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