Be wary of buying just because real estate is "on sale"

The good news for real estate investors: buying a home in Orange County is about as cheap as it was in 2003.

The bad news for real estate investors: competition is fierce and rents are dropping.

We all know that with so many families foreclosing on their home loans, buying inexpensive rental properties is becoming relatively easy for investors. One of the [millions of] side effects of this whole crazy economic downturn is that now those savvy investors are having a hard time finding tenants who can afford the rent.

Rental rates here in Orange County will "only" drop about 3% this year, which is not nearly so bad as Florida. There, rents are expected to drop 10%! (OC Register).

So for any tenants or potential first-time home buyers out there, pay attention and watch for opportunities, either to negotiate lower rent, or find an inexpensive home for which you can afford the mortgage. Investors, make sure you've got a reliable tenant lined up before you head into escrow to sign your closing papers.

Cyara Pott - Market Specialist