My, how things have changed – quickly! If you’re still investing, I’d love to hear how you’re adjusting and what you see for the future. I’ll start with some of the Covid changes we’ve already made.
NOTE: Much of what I share is what we’re already experiencing and changing in our own business. Much is based on our 2008-2010 real estate investing experience.
- Don’t stop. Historically, real estate always works, you simply need to adapt to market changes. Therefore:
- stay flexible
- learn about and secure funding
- stay involved in online networking groups – both local and national – to stay abreast of changes you need to be aware of as they happen.
- We’ve increased our marketing. Why?
- People are going to need money which means selling their personal or family members’ properties. We want to be available when a need arises to offer what help we can.
- There are fewer investors buying already because of fear of the future and lack of funding, so there hasn’t been a better time to be in the market in years!
- Get educated. What we’ve seen recently is exactly what we experienced in 2006-2007; everyone was getting into real estate investing because it was so easy. As the business becomes more difficult now, those who are prepared, informed, and educated have incredible opportunity.
- Buy for less. We all know the future holds uncertainty. Price values may drop greatly in the coming months/years. Sellers know that, too, which is why many will want to sell sooner rather than later. They also realize that you’re taking on their risk when you buy, so they understand when you offer less than they hope for. And, it’s true, you are taking on risk. Make sure when you make an offer that it’s a price you can live with if the value drops over the next 3-6 months.
- Properties are still selling well, so buy properties you can turn quickly – this is not a time to buy large rehabs!
- Buy and sell virtually. This is the perfect time to learn how to transition your business to virtual. We are currently doing due diligence online, asking permission to walk around the property and take photos, then asking the seller to either send us interior photos themselves or to leave the property while we enter and take photos. Sellers appreciate our concern for their well being. We are requiring that they allow a property walk-through before closing to insure their own photos do not omit something we should know about.
- Prepare for longer days on market when selling. Watch your local property days-on-market to have an idea of what to expect. As lenders begin to dry up and/or increase their borrowing requirements, there will be fewer qualified buyers and both selling and closings will take longer.
- Expect lenders to tighten borrowing requirements.
- We’ve already seen private lenders stop lending due to fear of future risk and a need to keep their funds secure for themselves.
- Many hard money lenders have stopped lending all together because they were bundling loans and selling them. Those loans are no longer being purchased, so those lenders are no longer lending.
- Banks have stopped offering jumbo loans, which means they’re already concerned and responding.
- Pretty much anyone still lending has begun requiring that the borrower has more funds on hand, higher credit score, and is a stronger applicant all the way around. Plus, they’re increasing points and interest rates.
- Higher priced properties will be the first to slow, so focus on the properties that are below your area’s median price point (and know what that price point is!).
- Expect this “event” to last for a while – possibly years. In 2008, the common response was that the worst was over and things were going to start getting better. “Things”, however, continued to get worse.
Remember, we’re very early in the “new reality” and what’s coming is hard to predict. Stay aware, stay flexible, stay informed, stay in touch with other investors. There’s always money to be made in real estate.
Do you agree/disagree with what I’ve shared?
What changes have you made or do you plan to make going forward?[ad_2]
Source by Karen Rittenhouse