Is It Time To Buy Income Property?
by Jim Scott

The past six years have been difficult for owners of residential income property.  Rents, adjusted for inflation, have fallen fifteen to twenty-five percent depending on the market.  Resale prices have declined even further. 
     The small income property market is about to change.   If you own a rental house or small apartment building, this is good news.  If you have been thinking of buying investment real estate, the time to act is now. 

The Income Property Market 

The market for smaller income properties has been depressed because of rents and home prices.

Rents, the key to in  come property appreciation, should increase  five to six percent per annum for 1997 and 1998. By 1999, the rental market should be similar to the early 1980s’ when rents increased ten to twelve percent per year. [The technical reasons for this are set forth in detail in my 30-page essay, “The Apartment Market in San Diego County,  1960-1996”. Call me for a complementary copy of this report.]

Another shift which will make these investments attractive is the improvement of the single family home market. As home prices  rise, duplexes, triplexes and fourplexes will increase in value— often independent of rents. Investors who purchase now can realize positive cash flow and appreciation benefits. 

This is not the situation with single family homes held for investment and rented.  In the late 1970s’ and 1980s’, this strategy was very profitable.  At best this approach will yield a three or four percent per annum return.  To obtain a return of ten percent or better, home prices will have to rise twelve percent per year for the next five years.  This is not a likely possibility. Owning a small apartment building is a better bet. You will have less appreciation and more management problems but greater safety and higher total return over the term of the investment. 

During the past six years both rents and prices have fallen. The two-to-four unit market represents a wonderful buying opportunity over the next year or two.  Prices are depressed but will not remain so much longer.

Afraid of Property Management?
Many people hesitate to buy that duplex because of problem of problem of property management.  The  solution is to hire a property management company. You will be surprised at how inexpensive it is and it will make your investment more profitable. With over 18 years experience as a  property manager, Mr. Kim Roessler is the full-time professional at Scott & Quinn.He can tailor his management program to your special needs and budget.  I am so  confident you will appreciate his personalized service that I am offering three free months of property management if you mention this article. Call Kim 291-7002 for details on this special offer. 
 

You can reach Jim Scott by email or at his office at 1111 Fort Stockton Drive. Jim's direct line is 885-9511. Jim has been a homeowner in Mission Hills since 1976. Scott & Quinn is the oldest full service real estate company in Mission Hills. There is also a professional property management team on staff.