Ever since the bubble broke in 2008, people have been treating the housing market like an infectious disease. Very few investors would dare go near it for fear of contamination. Nonetheless, this sector has been incredibly important in buoying the economy, particularly in the United States. This is why it was such good news when the initial months of 2016 began looking hopeful for this particular industry.
If you were on the fence about getting into this market, it is time to pick a side. At the moment, the trends in the market are looking incredibly good for those who are investing in real estate. If you are worried about losing too much money in this particular financing venture, however, there is a way to overcome this. This is by joining a Real Estate Investment Trust. especially one that is involved in commercial buildings such as apartment complexes. This way, the risk is evenly distributed. However, the REIT is expected to have dividend payout ratios of at least ninety percent. Here are some of the reasons for financing this sector:
Increase in Demand
The housing market may still be recovering, but this has not diminished demand even a little. Many individuals, particularly the middle class, are looking to buy homes. With the population on the rise, this will only cause the need for residential units to increase dramatically. Unfortunately due to the reasons listed below, those wishing to buy property are not so successful in their endeavors.
Unenthusiastic Home Builders
People may want homes, but construction companies and other involved parties are certainly not biting. Builders have provided a variety of excuses and included new, more stringent regulations. They have also mentioned that there is a lack of skilled individuals capable of carrying out the construction. All this adds up to people not being provided with the homes that they so desire.
High-End Homes
In addition to there being minimal construction going on, there is also a lack of certain homes. It has been discovered that the most number of homes being built are for more affluent people. This means that there is still a large number of the population that is not being catered to.
Lowered Financing for Home Buyers
Banks are still incredibly wary about who they are providing loans for. This means that fewer and fewer middle class individuals are being approved for mortgages. Since the demand for homes is still quite strong, people are left with no other choice than to rent. The number of people who are occupying rental units is constantly increasing. This is why it is a good idea to get into financing rental areas or apartment buildings while the demand is still elevating. This way, you will be ahead of the game.
Now, there are several conclusions that can be reached based on the information that has been provided. First, there is certainly a demand for more housing. This is particularly considerable from the middle class section. Second, there are not enough homes being built to quell this demand. This is compounded by the fact that those wishing to buy homes are unable to do so due to a lack of financing. This leaves people with just one option – rent. This is why you should get involved in financing at least one rental unit, as you will be bound to make a great profit.
