You keep hearing – and reading – that the real estate market has not truly recovered, and with 1.2 million foreclosures looming ahead for 2011, recovery may not be possible until a few more years down the line. With lower home prices and more foreclosures on the market, however, could now be the best time to invest in real estate? According to a piece in the Tri-State Defender by Carlee McCullough, now is the best time to purchase a property to diversify a portfolio or to rent out.

Why invest now? McCullough makes the following points:
• Real estate gives you the most for your initial investment
• If you buy and then upgrade a property, you can sell it for a greater value, resulting in a higher return on your initial investment.
• Real estate can be revenue-generating for second property buyers. Rental properties, in particular, pay for themselves with the right tenants. However, if you decide to purchase a building and rent it out, make sure you have a six-month reserve of rent in case a tenant does not pay or you need to take him or her to court.

If you are new to investing, consider attending a real estate investment workshop to learn the basics and benefits.

Buying a property for investment is similar to purchasing a home for yourself. Check the usual places to buy: MLS listings, foreclosure listings, agent listings, and city and county surplus properties. Listings are available by area, and if you are looking to buy a property to rent or diversify your portfolio, take the typical approach by getting your finances in order and contacting an agent.

If you are financially stable at the moment and are looking for another approach to increase your income, consider investing in real estate.

Since early 2009, we have seen – and been told on several occasions – that the average price per home and sales are going up. And each time, some prices went up and some home sales increased, but then a wave of foreclosures and more job losses thwarted any potential recovery. Sometimes, the number that increased slightly dipped downs, and on others, it stayed the same. As we saw last week, the projection of 1.2 million foreclosures for 2011 – juxtaposed with an unemployment rate between nine and 10 percent – indicates that recovery is only in a nascent stage, if it can be called “recovery” at all.

Susan Lawrence, a real estate consultant and President of Real Estate Strategies, Inc., presented an argument in an editorial last week about unfounded optimism in real estate. Rather than figures truly showing an increase in home sales over a greater period of time, only slight increases between drops and plateaus are evident. Can this truly be considered recovery?

The overall path of real estate, argues Lawrence, is downward. For every increase in home prices, foreclosure rates go up. She states the rates from 2009 to ’10 went up 14 percent, and as we saw last week, more than 1 million foreclosures are predicted for 2011. Additional factors, such as a lack of substantial job creation, fewer financing options, and difficulty obtaining credit, contribute to a greater picture of decline punctuated by small upswings.

Lawrence does not believe that 2011 will be a significant “turnaround” year for the real estate market, with prices and sales increasing. She, however, also does not mention that the year could be a tumble down another hole, either. Could 2011 be another plateau? According to Lawrence, only when more jobs are created will the real estate market show substantial signs of improvement.

When the amount of foreclosures is expected to increase, you know that the housing crisis is far from over. While we’ve been told for the past year or more that the market is improving because of a greater price per home and more sales, an article published recently in Yahoo News states otherwise. Instead of the early optimism seen since 2009, 2011 is expected to have the largest amount of foreclosures since the crash of the real estate market in 2007. 2010 saw 1 million foreclosed homes, and many more – one in 45 homes – filed for foreclosure. 1.2 million homes are expected to be claimed by lenders in 2011.

Although mortgage rates are decreasing and homeowners are now able to refinance, outside factors are preventing homeowners from making mortgage payments on time, job losses in particular. Although the unemployment rate has decreased slightly, it continues to remain between nine and 10 percent. Homeowners, even those without adjustable rate mortgages, are unable to make payments. As a result, a lack of employment opportunities leads to more foreclosure filings.

Buyers, on the other hand, aren’t grabbing the properties up for sale with the same fervor as in 2007 – or even before the latest first time homebuyers’ tax credit expired. Lower mortgage rates are only modestly encouraging, and the threat of job losses looming overhead makes one wary of making such a large investment.

Is this just a case of chick-or-the-egg syndrome, or is the job market keeping real estate down? The latter could be the case, as a job loss can lead to late or missed mortgage payments – and eventual foreclosure filing – and more foreclosures on the market lower the average home price. A lack of jobs, additionally, prevents more from purchasing a new home. While both affect each other, the creation of more jobs may create a buying public more likely to purchase a home.

Some simply purchase a property as a home. Others, however, purchase real estate to rent out the property or to build up an investment portfolio. If you fall into the latter category for purchasing Connecticut real estate, the Connecticut Real Estate Investors Association (CT REIA) is holding workshops in January and February for those considering purchasing a property for this purpose.

According to a press release, the workshop will focus on the basics of investing in real estate, such as wholesaling, rehabilitating the property, selling quickly, or holding on to it to make an income or profit. As the press release explains, those attending this workshop should expect to learn about:
• Working with REALTORS® in buying and selling
• Finding a good investment property
• Inspection
• Evaluating a deal and making an offer
• Wholesale properties
• Dealing with retailing
• Being a landlord; and
• Creating income and wealth

Although real estate has a greater tendency to be a sound investment, purchasing a property for this purchase has advantages and disadvantages. Investment generally includes purchasing a building and renting it, improving or upgrading and selling, or wholesale properties. Many turn to real estate for this purpose, as it is easier to finance than most other investments. Only a portion of the down payment is needed.

Real estate is a non-liquid investment, however, and if you own a property, you need to maintain it and pay taxes regularly.

While the real estate market has been in flux, it appears to have reached a plateau, and in some areas, renting, as opposed to owning, has become more desirable. Purchasing a property in Connecticut allows you to capitalize on this and gain income through renting out apartments or a building. The CT REIA workshop will be held in Meriden on January 20, February 2, and February 9 from 6 to 9 p.m. To attend, visit their website and register.