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Great Income-Producing Real Estate Investment Opportunities Start to Emerge

DENVER, Colorado -- Aug 02, 2008 -- In the midst of an ongoing foreclosure crisis, many investors are finding golden opportunities to buy income-generating properties.

While most of the real estate news is focused upon the ominous clouds, a perfect storm of positive factors is conspiring to create a silver lining in the sector of the real estate market dedicated to income-producing properties.

Large numbers of homeowners have sold -- or lost homes to foreclosure -- and are moving into the rental market to create unusually high demand. The influx is creating a mini bull market for rented or leased properties, even as real estate sales remain priced based on bear market dynamics.

One of the most important sellers of single family homes this year happens to be lenders, because they have amassed a great deal of property due to an avalanche of foreclosure repossessions. Banks lose money when they hold on to such properties, and they are reportedly slashing prices aggressively. The homes that donít sell at foreclosure auctions are retained as so-called "real estate owned" or REO properties, and lenders have cut their asking prices for REO homes dramatically within the last several weeks.

As many as 40 percent of the foreclosures in some cities in the USA involve debtors who bought tenant-occupied rental houses, and savvy investors are now buying up those properties just as monthly rental prices surge. That means that they can buy the properties at deep discounts but charge higher than normal rental fees. As a result, they are able to realize positive cash flow. In essence they are buying homes and then letting their eager tenants pay the mortgage, which is a classic formula for investment success and high returns.

Prices have fallen in unlikely high-end markets such as NYC, for instance, and one of the most depressed markets within the luxury home market -- Palm Beach, FL -- is a prime example. Although the low end of that upscale market is in the millions, the discounts relative to normal pricing are extraordinary.

To maximize success when buying a rental property, experts offer these tips:
* Set aside an interest-bearing escrow account and put security deposits there for safekeeping to avoid the temptation of spending them.
* Those looking for retirement or vacation property can buy it as a rental and gradually convert it to a personal second home as retirement nears.
* Hiring a Realtor or professional management company to manage rental properties can save money in the long run.
* Landlords can tax-deduct management costs while avoiding hands-on management such as emergency repair calls, rent collection, and tenant background checks.
* Donít use home equity loans to buy a rental property, because it can lead to owing more on a home than it is worth.
* Set up a simple corporation to hold investment properties. That offers protection from legal liability, and can make it easier to qualify for certain types of tax deductions.
* Be sure to maintain adequate homeownerís insurance coverage, and encourage tenants to take advantage of an affordable renterís insurance policy.

The number of new listings for homes coming on the market has begun to slow, the Fed has taken steps to rescue about 400,000 homeowners from foreclosure, and interest rates appear poised to rise. Those factors will likely inspire buyers who have been waiting on the sidelines to go ahead and purchase while rates and prices are at their lowest levels. Those hoping to capture the best bargains in the market for income property may want to likewise act soon, while there is still a chance to profit the most from a rare confluence of factors influencing purchase and rental pricing.

For more information, visit: http://www.GayRealEstate.com

Jeff Hammerberg, Founder & CEO
Denver, CO
Toll-Free: 1-888-420-MOVE(6683)


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