Wow, 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 are already experiencing and changing in our own business. Much of it is based on our real estate investing experience from 2008-2010.
- do not stop Historically, real estate always works, you just need to adapt to changes in the market. Therefore:
- stay flexible
- Get informed and secure financing.
- stay involved in online networking groups, both local and national, to stay on top of changes to be aware of as they happen.
- We have increased our marketing. Why?
- People are going to need money, which means selling their personal property or that of their family members. We want to be available when a need arises to offer what help we can.
- There are already fewer investors buying due to fears of the future and lack of financing, so there hasn’t been a better time to be in the market in years!
- find out. What we have seen recently is exactly what we experienced in 2006-2007; everyone was getting into real estate investing because it was so easy. As business gets tougher now, those who are prepared, informed and educated have an incredible opportunity.
- Buy for less. We all know that the future holds uncertainty. Price values may drop a lot in the coming months/years. Sellers know this too, which is why many will want to sell sooner rather than later. They also realize that you’re taking their risk when you buy, so they understand when you offer less than they expect. And, it is true, you are taking a risk. When you make an offer, make sure it’s a price you can live with if the value drops in the next 3-6 months.
- Properties continue to sell wellSo buy properties that you can convert quickly – this is not a time to buy big 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, requesting permission to walk around the property and take photos, then asking the seller to send us photos of the interior or exit of the property while we enter and take photos. Vendors appreciate our concern for their welfare. We request that you allow a tour of the property prior to closing to ensure that your own photos do not leave out something we should know.
- Prepare for longer days in the market When Selling Look at the days on the market for your local property to get an idea of what to expect. As lenders begin to dry up and/or their loan requirements increase, there will be fewer qualified buyers and both the sale and closing will take longer.
- Waiting for lenders to toughen loan requirements.
- We have already seen private lenders stop lending due to fear of future risk and the need to keep their funds safe for themselves.
- Many hard money lenders have stopped lending all together because they were bundling up loans and selling them. Those loans are no longer bought, so those lenders are no longer lending.
- Banks have stopped offering jumbo loans, which means they are already concerned and responding.
- Almost everyone who continues to lend has begun to require that the borrower have more available funds, a higher credit score, and be a stronger applicant in every way. Also, points and interest rates are increasing.
- Higher priced properties will be the first to slow downso focus on properties that are below the median price point for your area (and know what that price point is!).
- Expect this “event” to last a while – possibly years. In 2008, the common response was that the worst was over and things were starting to get better. “Things,” however, kept getting worse.
Remember, we are very early in the “new reality” and what is coming is difficult to predict. Stay informed, stay flexible, stay informed, stay in touch with other investors. There is always money to be made in real estate.
Do you agree/disagree with what I have shared?
What changes have you made or plan to make in the future?