Now is an excellent time for property investors to grow their portfolios. Savvy property investors know that opportunity exists when the market is volatile. In fact, single family rentals typically see a surge during times of recession. With a market and mortgage products that keep changing, investors who are new and those with experience might appreciate the advice. We have put together information for property investors and Realtors who work with investor clients. Our Investor Cash Flow product is being offered that qualifies investors on cash flow – no tax returns or employment information is required. Opportunity exists and there is less competition from other buyers. Capitalize on the housing market right now and you have the lender with a product that might make it happen. We hope you find this information helpful:
The Right Market Matters Right Now
States and cities that you were eyeing before the pandemic that were economically weak may be even weaker now and you may want to hold off on buying rentals for the short-term until they recover. Large cities such as New York, Chicago and Los Angeles still have strong economies, but are still fairly expensive. Growing metros have affordable options that could result in cash flow and warrant looking into for potential deals. It is important to look at job growth in each city. A market that has held strong employment historically, diverse employment, and consistent high rental demand typically overcome recessions quickly. Did you want a property pre-COVID, but let it go because you couldn’t negotiate a lower price. It’s possible a deal could be made now lowering the price. It’s worth the time and research! Time and time again real estate has proven to protect assets when the economy takes a dip. Buying investment property for cash flow could provide an opportunity due to increasing rental demand as fewer people are able to buy a home. The result is in both long term appreciation and cash flow. Circumstances will change drastically once the economy starts booming again. That brings an entire new set of challenges for investors – more competition and higher home prices.
Buy Rent Ready Homes For Quick Cash Flow
Total rehabs and flips might not be the way to go right now, especially if the goal is to produce income right way. A turnkey investment that can cash flow as soon as possible is most advisable right now. Housing materials are either hard to come by or shipments are delayed which could easily stall a renovation. No one needs to find themselves in a bind with a home they can’t rent where they are forced to turn around and sell during this crisis. This is most likely not the time to raise capital by selling off property.
Understand The Opportunity AND The Risk
The National Association of Realtors issued a report indicating that many more buyers have withdrawn from the market than sellers. By the end of March 2020, 48% of Realtors reported that buyers decided to hold off on their home purchase, while only 16% of sellers decided to pull their listings. This indicates that the housing market is shifting in favor of buyers. There are people out there who want to sell right now and are willing to price to sell quickly. Everyone still needs a place to live which is why real estate continues to thrive even in recessions. Along with the opportunity comes risk due to the impact of the Coronavirus. Right now it is important to buy below market value price if you can. This can help ensure you don’t lose should the market value of the property decrease. Note that it can be harder to get approved for financing and product guidelines have changed. This is why it is crucial to talk to a lender and understand how cash flow loans work.
Lessen Potential Risk
There are many markets that do not allow evictions and civil courts might still be closed. If that is the case in the market you are interested in, you may want to wait until that jurisdiction lifts its eviction moratorium. As well, it could take longer than usual to evict tenants who aren’t paying their rent due to closures and delays with civil courts. Check with your insurance company to see if they still offer Rent Guarantee Insurance (RGI) during the pandemic to be covered if a tenant can’t pay for a few months.
Although the market presents challenges there are some extraordinary opportunities to buy low and get cash flow going quickly. Property investors can grow their portfolios buying properties at prices not seen in a very long time. For more information, contact us about our Investor Cash Flow loan that has helped many property investors build their portfolios.
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