After the Sale – an Owner’s Manual

After the Sale – an Owner’s Manual

Ever since people began purchasing real estate for the purposes of investment (the world´s second oldest profession, perhaps?), their expectations have been moderated by the realities of inflation, supply and demand, and a growing need for housing.

Though there are far better books on this topic available, the general consensus on real estate has been that real estate as an asset class in the United States has appreciated, on average, 6% per year non-inflation adjusted, since the 1920´s.

Bonds have returned historically less, stocks more. Real estate in warmer climates and on the coasts has appreciated faster than markets in rustbelts and colder climates.

We´ve all heard stories of condo flipping in Miami for $50k profits in a month and doubling of Southern California home prices in 18 months – BUT - almost universally in history, the real estate holding period for most passive investors has been five to seven years – enough time to ride out at least one rough cycle, and enough time to have paid down principal enough to have a decent equity.

Real estate is not as liquid as the stock and bond market, and it is more expensive to liquidate (though Castle Hill offers "round trip" commission discounts to clients who purchased property with us, one can still assume a 7% of sale price cost to sell when factoring in title policies, escrow fees, home warranties, repairs, etc).

On the other hand, through the magical benefits of leverage, real estate can and should be a viable investment for most prudent investors that do their homework, and can offer excellent returns, even in modestly appreciating areas.

Let´s look at a typical Austin investment up close with a magnifying glass.

Next Page: The First "Make Ready" and Realities of Purchase