The Right and Wrong Way to Invest in Real Estate During the COVID Pandemic
What is the right and wrong way to invest in real estate? If only. It might be great if we could most learn the “right” way or maybe the “best” way to invest, according to the Local Records Office. We’ve been investing full time since 1995 and have absolutely done hundreds of deals every way you possibly can think of from wholesaling for you to retail flipping, assigning, selling, using lease options,s and holding renting. I can assure you there’s no “right” “wrong” or even “best” way to invest in real estate.
Why is This? It Depends on These Things
- Your objectives
- Your location
- The property
- The customer and probably the most important, the economy
The late ’90s was a great time to renovate and sell (though we didn’t because we didn’t contain the necessary cash to renovate, nor did we have the success necessary to entice lenders). Why was it a great time to flip? Because it was easy to sell. For those of you who weren’t in the industry then, know that all you needed in the late ’90s for being approved for a mortgage seemed to be a pulse. And what have been houses appraising for? Anything you needed these phones. Simply tell your appraiser what your buyer needed the house to appraise for and, as promised, that’s what the appraisal would grow to be, sometimes to the dollar.
Investing in Real Estate
Let’s fast-forward to 2015 as well as we wonder where those loan officers and appraisers have gone. If you tried to sell a property in the past few years, you know that it may be tough for buyers to get a loan in fact it is an effort to get the exact property to appraise for as much as needed. Lenders have tightened their asking for requirements and appraisers are under considerably more scrutiny since the 2008 home finance loan meltdown. Not that either of the people is a bad thing, just the fact we work with today.
And this reality is in constant flux. Selling, and therefore flipping, is actually much easier once more than it was recently for assorted reasons:
- Lenders seem to be lending again, meaning buyers are back on the market looking for deals while prices and interest levels are low causing the market to stabilize somewhat leading you to increased house values.
As you can see, the “best” way to invest in real estate is not necessarily the same year in year out. When lending and values tend to be strong, SELL! Flip, wholesale, retail – unload the dogs from your portfolio.
For the reverse overall economy, when lending froze and the particular economy depressed, we were thankful for being holding rental properties as we had more tenant applications than vacancies. Previous homeowners were losing their homes (for various reasons) and needed to downsize or just rent because they no longer qualified for loans. Back while lenders were giving loans with not even requiring the borrower for you to qualify (no doc loans), it was difficult to get a tenant.
The moral of this story: there is no “right” way or “wrong” way to invest in real estate. There are certainly “better” ways based on the circumstances discussed above, but don’t wait until you’ve identified the “right” way to invest or you’ll miss a huge amount of opportunity.