It's Always Darkest Before the Dawn

There's probably never been a better time to buy an investment property.  Pessimism (especially about residential real estate) has been on the rise, stoked by the media and realization that we are headed into a "double dip" recession.  Sure, prices have been declining over the past year and they may continue to decline some more before eventually recovering, but if you are investing for positive cash flow, you shouldn't care about short-term value fluctuations.  Just as people once believed that real estate values would continue to rise year after year, now people are beginning to believe the opposite is true - that real estate values will continue to endlessly plummet.  You simply can't lose sight of the fact that underneath all of this short term volatility, there is still a cycle.

Here are some positive factors to consider for residential investment property:

• Real estate provides an excellent hedge against inflation

• There are numerous tax benefits to owning investment property

• If you are a contrarian investor, you have to start liking residential real estate (since everyone hates it now)

• Most other asset classes, including commodities, stocks and bonds are not really a bargain anymore, having increased in value significantly since the depths of the Great Recession

• People will always need somewhere to live and we are turning into a nation of renters due to inability or unwillingness to buy a home, which bodes well for owners of rental property

• Cost of capital is very attractive - you can now get a 5% (or so) 30-year fixed mortgage on non-owner-occupied property