Have you ever wondered how to begin a career in real estate?
If you have ever thought about learning how to begin a career in real estate, there may be no better time to do so than now. For what it’s worth, today’s real estate market trends are very conducive to a promising career in the industry. Let’s take a look at some of the most important reasons prospective investors may want to learn how to begin a career in real estate.
Now is a great time to get into the real estate industry, but few are aware that the hosing market is telling them the same thing. For all intents and purposes, the trends we are witnessing today are encouraging for anyone interesting in learning how to begin a career in real estate.
Interest Rates Remain Historically Low
The tail-end of 2015 saw the Federal Reserve raise the key interest rate for the first time in nearly a decade. However, it is important to note that they promised to do so at a sustainable pace. As a result, the Fed suggested a more tempered approach towards impending interest rate hikes; they would be raising the key interest rate gradually for the foreseeable future. As I am sure you are aware, their strategy hasn’t exactly gone according to plan. Uncertainty swirling in the global marketplace has forced the powers that be to preemptively halt future increases until the economy is strong enough to handle such a move.
“The Fed telegraphed it will be patient with future rate increases so as not to kill the economic recovery,” said a report on CNN Money back in December when news of the hike was made public. For all intents and purposes, hikes in the future will be gradual and made with the best of intentions.
Now that it is August, it would appear as if the Fed has every intention of keeping its word regarding the rate hike pace. Global uncertainty has “prompted the Federal Reserve in its June statement to keep rates unchanged and trim back its longer-term interest rate forecasts, in a sign of greater caution,” says a recent Financial Times report.
Not surprisingly, prolonged low interest rates are just what real estate investors like to see. For what it’s worth, cheap money awards real estate investors more buying power. The cheaper borrowing costs are, the more investors will be able to afford. What’s more, lower interest rates will almost certainly allow real estate investors to maximize their profits. Those currently learning how to begin a career in real estate couldn’t have chosen a better time, given the buying power interest rates currently awards them. Today’s historically low rates ultimately allow savvy investors to do more with the money they are given.
Today’s mortgage rates make investing in real estate even more attractive when you compare them to historical trends. No more than two decades ago, at about this time of year, the average interest rate on a 30-year fixed-rate mortgage was 10.2 percent. To put things into perspective, July’s monthly average commitment rate on a 30-year fixed-rate mortgage was 3.44 percent. If you are currently learning how to begin a career in real estate, the road ahead looks great, as interest rates look like they will remain low for the foreseeable future.
According to the Financial Times report, “the median of Fed forecasts suggests policymakers are still expecting two interest rate increases this year, but rate forecasts for 2017 and 2018 have been pared back, as has the Fed’s estimate of the longer-run policy rate.”
Banks Are More Comfortable Lending
Nearly a decade removed from the onset of the Great Recession, it’s still hard to ignore the impact the mortgage collapse has had on the housing sector. In fact, the wake of the recession can still be seen across the country in more ways than one. Up until recently, it was relatively difficult to receive mortgage approval, given the average lending institution’s in ability to forget the past. In case you forgot, a lot of people blame the irresponsible lending patterns of banks for the downturn.
It didn’t take long for banks to acknowledge their shortcomings and attempt to reconcile their transgressions. Before you knew it, it was much more difficult to receive loan approval, as any threat of default was enough to scare away even the largest of banks. New mortgage guidelines were implemented to protect against the risk of default, and more people found it difficult to receive mortgage approval as a result.
However, a lot of ground has been made up since the worst part of the recession, and banks are more confident in their lending patterns. If for nothing else, it has become a lot safer to lend to homebuyers and — in our case — real estate investors. While it took some time, banks have finally opened their doors and started lending again. And as I noted before, they are lending at a cheaper rate than we have come accustom to. That means those that are just learning how to begin a career in real estate will find it easier to receive loan approval than those that have been trying for the last 10 years.
Having said that, you will need a lot more than a signature to obtain a 125 percent loan-to-value mortgage with no money down. Not surprisingly, that’s what got us into this mess in the first place. Instead, banks will exercise some degree of responsibility, but not to the extent they were in the last six years. Those with the appropriate funds and decent credit shouldn’t have any trouble receiving approval on a fixed-rate loan.
Of course, if you want to learn how to begin a career in real estate, you need to know that banks aren’t your only option. In fact, sometimes it is in an investor’s best interest to go through a private money lender or a hard money lender. That topic, however, is better left for another day. For now, it’s important to know that today’s market has made it easier to receive a loan.
Prices Are Relatively Low
Yes, it’s true: homes have appreciated a great deal since they hit rock bottom during the worst part of the recession. However, while prices have risen dramatically, many cities have yet to see their home values exceed their pre-recession peaks. What’s more, today’s low interest rates are making it much easier for real estate investors and regular homebuyers to afford the property they want. Remember, lower mortgage rates make it possible to do more with the money you have at your disposal; that theory holds weight whether you are a first-time homebuyer or a new investor learning how to begin a career in real estate.
It is worth noting that there are still great deals to take advantage of. That said, if you are one of the many people that want to learn how to begin a career in real estate, you should pay close attention to the foreclosure market. According to RealtyTrac, “there are currently 912,490 properties in U.S. that are in some stage of foreclosure.” While foreclosure filings have improved dramatically, it is still possible for savvy investors to find great deals on properties they can flip.
Today Is Better Than Tomorrow
Those currently taking the steps to learn how to begin a career in real estate will almost certainly be glad they did so today, as opposed to a decade from now. At the very least, investing in real estate takes time; accumulating wealth is the result of time and knowledge. While not necessarily the equivalent of compound interest, the sooner you get involved in real estate, the sooner you can start reaping the rewards. Start building equity in a home and find out for yourself.
It’s time that learning how to begin a career in real estate coincided with reading market trends. All you have to do is listen to what the market has to say to understand why now is a great time to invest in real estate.