Passive Residual Income From Real Estate In A Changing Market

March 31st, 2008 | stacey | Financial Freedom, Financial Independence, Passive Income, Passive Income Opportunity, Residual Income, Residual Income Opportunity

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Earning passive residual income from real estate in a constantly changing market can get tricky. Right now housing prices are declining after several years of being inflated. Many investors find themselves losing equity in the homes they have and reluctant to purchase other investment homes because of the current state of the market.On the other hand, first time home buyers have an opportunity to take advantage of lower priced homes or “handyman specials” that may need some work but are in an affordable price range. Couple lower housing prices with lower interest rates being charged on mortgages and first time home buyers are scurrying to find their homes while the market is still on a downward spiral.

Many financial experts expect housing prices to soar again within two to three years which means investors have to sit tight and maintain their properties until the market improves. It also means people who may not have been able to afford a home before may be able to be homeowners.

If people purchase homes during this downward spiral, it is important to have them assessed by an engineer or other expert to make sure the work that needs to be done on the home doesn’t exceed the amount you’re saving.

According to Christopher Thornberg, an economist for Beacon Economics, “With prices falling the way they are now, you’d be a moron to buy in this market unless you’ve found the dream home and you’re willing to take an equity loss. I hear we’re getting close to the bottom, and I just laugh because the numbers don’t back it up at all.”

Yet mortgage broker Don Marginson stated, “The bottom feeders are fighting over the lowest-priced stuff right now. Before, they weren’t even in the game. Based on that, we’ve probably hit the bottom. That doesn’t mean we aren’t going to see some more problems, but we’re toward the end of it.”

While the current market may not be the best for investors, it is giving new people a chance to buy a home and attain greater financial freedom. Real estate is always a good passive residual income investment but you need to be savvy about when and where you purchase.