Residential prices are down significantly from market highs. National prices have declined about 40% from their peak, while some areas have dropped more than 50%. Although market levels may not be precisely at the bottom, historically low prices present unique opportunity for savvy investors.

Rising rental demand is generating higher rates. The foreclosure crisis has reduced U.S. home ownership significantly due to i) families losing their homes, and ii) uncertainty of getting on the property ladder, and iii) prime borrowers preference to rent and walk away from high mortgage repayments in negative equity homes. This as all led to a vast increase in the number of renters and, as a consequence, the rental rates.

In Paragon’s target markets, rental income as a percentage of property price is at its highest level in a generation. In fact, rental yields are now significantly higher than most other investment vehicles, which enables the informed investor to generate an attractive return.

The cost to finance an investment property is at an historic low. In Paragon’s target markets, such low mortgage rates are well below the rental yield, which produces an even higher investment return.

The U.S. Federal Reserve is executing a monetary policy to ease credit and thereby stimulate the economy. Although this may help lead to growth, it will also encourage inflation, which tends to benefit hard assets like real estate.