The real estate investors that I know see difficult economic times in a slightly different light than other people. We know that markets and jobs are suffering. But, we also know that we play a vital role in rebuilding.
When there are uncertain times, one thing is certain: You can find investment properties out there that can provide people with rental housing right now and become someone’s home when the market turns around. There are opportunities out there to do good for our communities and build our businesses—and that’s what drives us.
But, searching for investment property in challenging times has a lot of challenges. After all, you want to find a property that you can rent at a reasonable price right now and sell when the market rebounds. You don’t want to be stuck with an anchor dragging you down.
Luckily, you can find the investment property that works for you by being smart, not getting yourself caught up in wild goose chases, and taking advantage of opportunities to get an edge. Here’s the path to do just that.
Understand the Market to Find the Right Neighborhood
As of this writing, we haven’t seen mass sell-offs or mass foreclosures as we did in 2007-2008. That makes sense; this recession isn’t the result of a real estate bubble. People have lost their jobs, but there have been protections for homeowners and renters.
That said, there will be areas that are hit harder. There will be zones where there are more foreclosures and more houses for sale than we would normally expect to see. You might think these will be great places to look for an investment property. And, you might be right.
But, even when opportunities to buy are plentiful, there are a couple of things to consider for each and every one.
1. Will the property require a lot of work before you can rent it out? The longer you take to complete a rehab, the longer you are going without making passive income.
2. Will the property be able to be sold in a year or more when the market gets back on its feet?
That second one is very important. If there is an area where you find a lot of inexpensive property for sale, there is no guarantee that it is going to be worth more in a few years. After all, those areas are the ones where recovery is most likely to be slower.
Your better option is to look for homes that are in neighborhoods already considered “up-and-coming.” This recession will most likely slow down the neighborhood’s development. But, it also will still be a place that renters might look for, especially in demographics less impacted by the market crash, like technology, marketing, and related sectors). And, houses there are likely to be worth more after the rebound.
None of this is guaranteed, of course. Valuing a property is complicated. But, the lesson is not to look at the easiest and cheapest house and assume it is a good investment property. Buying low is not a failsafe indicator of being able to sell high.
Look for Leads in The Right Places
So, let’s say you’ve targeted your ideal neighborhood or neighborhoods. You know which region looks like it will be the best for renting for a time and then selling. But, what’s the best way to get leads?
There are a lot of ideas out there. Probably the most common is buying a foreclosure property. In the foreclosure crisis of 2007-2008, this was a very popular way to build a portfolio. Sheriff and bank auctions were wild scenes, with investors snapping up houses for incredibly low prices.
Of course, that was then. Things are different now. For one thing, there is a lot of competition, which always means higher prices. The other side of that squeeze is that there will be fewer houses in any given auction. Even if foreclosures go up, they won’t reach the levels of a decade ago. Once a house is foreclosed upon, there will be countless investors bidding—as well as large, deep-pocketed institutions. That also means higher prices.
The other problem with foreclosures is that you likely don’t have all the information on them, so it is more challenging to evaluate their potential. That increases the chances of ending up with an anchor.
Ideally, you will be able to find the owner of a distressed property before the banks foreclose. After all, there are going to be a lot of people feeling a financial pinch and re-evaluating their property ownership. They will be looking to sell quickly.
So, what you want is a way to get qualified leads while reducing competition. But what’s the best way to do this?
The Best Way To Search for An Investment Property in Uncertain Times
If you ask 10 real estate investing professionals about the best way to search for a distressed property, you’ll get nine different answers (there’s always one agreeable type). But, everyone will agree that if you have an easy way to get qualified leads, that’s the dream. I found that dream when I became an independently owned and operated HomeVestors® franchisee.
HomeVestors has been around since 1996, and everyone knows and trusts the national “We Buy Ugly Houses®” ad campaign. It’s iconic. And, it’s a name to which people turn when they need to sell fast. HomeVestors® franchisees have a reputation for fairness, and in tough times, that’s what people need.
By buying investment property, you’re planning for your future. It’s good to have the backing of a strong, trusted brand with a history of coming out on top even when times are challenging. If you’re interested in a better way to search for investment properties, request information about becoming a franchisee today.
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