Real estate is one of the most stable investments that you can make. With carefully chosen assets, investors can expect significant and steady cash flow. You can also enjoy consistent and strong returns, as well as tax advantages.
Your real estate investment can give you passive income through rentals. It can also be a good long-term investment as its value increases. Many investors employ real estate to build their wealth and diversify their portfolios.
However, investing in real estate is not for the weak of heart. You have to be fully prepared to start with your investment. Acquiring real estate properties requires cash, and not just for the downpayment. If you are buying an existing structure, you will need to spend on repairs and renovations.
You also need to spend on integrity checks, such as electrical installation condition reports, to ensure the property’s safety. If you are buying an empty lot, you will need to spend on constructing the structure you plan to have. The truth is, buying a piece of land, a house, or an apartment complex is expensive.
Many financial experts warn newbies not to invest money that they cannot afford to lose. Borrowing money for your investment is not recommended, and you should consider first paying in cash if you can. However, if you need to get a loan, you should ensure that you can pay for the mortgage, with or without rental income. If you cannot afford to pay for the mortgage, your investment will become a financial burden.
Buying A Real Estate Property In The Middle Of A Pandemic
Mortgage rates are at historically low rates. While no one knows how long this will last, people are scrambling to take advantage of it. The demand for homes in the suburbs has also increased as more families found themselves working and studying remotely. As the demand soared, the supply could not keep up, resulting in higher prices.
According to a report by the National Association of Realtors, home sales during the pandemic were the highest since December 2006. Cities and metros may not be doing well, but suburban and rural areas see an increase in the sales of pre-owned homes.
If you are taking out a loan, you must remember that banks and lenders are stricter now and have put up extra safeguards. Yes, mortgage rates are relatively low, but they are also harder to obtain. Criteria are now tighter to qualify for a home loan due to the current economic situation.
However, the Fed won’t likely raise the interest rates until 2023. This gives you more time to acquire the properties you have been eyeing and more time to prepare for your investment plan.
Should You Be Investing In Real Estate Right Now?
If you have plans to invest in real estate, there is no reason why you should not do it now. COVID-19 is not going anywhere soon, and there is no reason you should hold off a plan that you have been preparing for. Investing in the right and profitable business can give you an additional income stream amidst the pandemic’s volatility.
Pandemic or no pandemic, people will need a good place to live where they can build their lives. People need a comfortable home that will keep them safe while allowing them to be more productive.
Single-family and small multi-family dwellings in the suburbs and smaller towns that you can rent out can be great investments right now. You get to enjoy higher rent compared to their buying price in smaller towns. Prices are also more stable and less unpredictable, making them easier to acquire.
Be Ready For Opportunities
Opportunities come when you sometimes least expect them, so it pays to be prepared. Market uncertainties can either give you ceiling-high prices or golden once-in-a-lifetime opportunities. Raise your capital and build your current portfolio not to miss out when good deals come your way.