Yesterday while on floor duty at my office, I either talked my way out of a potential sale or took a good step towards earning some clients’ trust. A couple from Northern Virginia came in asking about condos in the area, strictly for investment purposes. After much discussion about their target rental market (professionals, not undergrads), timeframe for purchasing and other factors, we came to a simple conclusion. Purchasing a nearly $300k, one bedroom condo that could be rented for perhaps $1200-$1400 a month (on a good day) was not a wise financial investment. The mortgage payment would be, assuming a 20% downpayment, at least $1400 a month, plus a $200 condo fee.
Sometimes purchasing a property purely on a speculative basis, especially when so many others are doing the same thing, is not the best decision.
I have observed a similar situation. I currently have a rental property, but the numbers simply don’t add up for residential investment properties right now. While I would like for my properties to increase by 12% per year indefinitely I suspect that this is unstable. Prices can’t outpace wage growth indefinitely without some adverse correction in the market.
I think you gave sound advice and gained a client, which is often more valuable than a sale.
I hope that I gained a client; my philosophy is perhaps a bit idealistic – if I do the right thing consistently and always keep a long-term frame of mind, success will naturally follow. We shall see!