Is investing in Port Angeles real estate a good idea, and is the timing right? No, if you buy the wrong house; no if you buy the right house in the wrong area; and no if you buy the right house in the right area at the wrong price. But investing in Port Angeles real estate in this current market could be one of the best investments you ever make. The emphasis is on being able to identify the right home in the right area and negotiating a price that pencils into a good long-term investment.
Port Angeles Real Estate
Port Angeles Real Estate Example
Buying a home as an investment means getting a reasonable rate of return on your money. It means putting hard earned money into an asset that will bring you two things in the future: 1.) a cash flow that is a good rate of return, and 2.) the likelihood of a great long-term appreciation. (Also see my previous article entitled Real Estate Investing and Creating Wealth.
It may be obvious that buying the right house in the right area are two keys to a good real estate investment, but it isn’t so obvious to all investors. Many have purchased homes that they cannot sell many years later because they violated one or both of these two elements. I can’t articulate in this short space how to identify a good house in a good area in Port Angeles real estate, but I know it when I see it. This reminds me of what Supreme Court Justice Potter Stewart wrote in his opinion in Jocobellis v. Ohio (1964):
“I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description [“hard-core pornography”]; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that.”
Port Angeles Real Estate Rentals
Rental rates are relatively low in Port Angeles, so if you get a 80% or higher mortgage, you won’t have a positive cash flow for any houses priced over $220,000, or less. Payments on a mortgage of $176,000 (after a down payment of 20%) at 4.0% (today’s going rate) on a 25 year amortization schedule would mean payments of $928, not counting taxes and insurance. A simple 3 bedroom, 2 bath home with 1,800 square feet in a nice area will rent for $800 to $1,200, depending on the house condition, quality, and location. So it will be very hard to break even or have a positive cash flow for houses above $220,000.
Of course, if you pay all cash for your Port Angeles real estate, you won’t worry about getting a positive cash flow, but you still need a home that is very sellable in order to capture your appreciation on the day you do decide to sell. This is a critical element of successful investing. Trying to sell a home no one wants is a disaster, and you might be surprised to learn how many first time investors have made this mistake.
In my opinion, this is a great time to invest. Just be sure you stick to the solid principles of investing in your Port Angeles real estate.
Last Updated on September 4, 2011 by Chuck Marunde
