Invest in Real Estate Now?

Dated: 06/16/2020

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Should You Be Snapping Up Investment Properties Right Now?

Does financial fallout from the coronavirus pandemic make now a good time to buy investment property? The answer is that it's a good time to buy if you can find inventory at a good price, just as it always is. But finding homes at a good price could be something of a challenge.

Currently, sellers have responded to the lockdown by pulling their listings. New listings were down as much as 44% in the US in April compared with the previous year, according to data from Realtor.com, and down 56.8% in Canada according to the Canadian Real Estate Association (CREA).

At the same time, new-home construction slowed in April as many builders became concerned about the state of the housing industry amid the pandemic. They didn't want to build homes no one would buy, or that would lose value as soon as the last nail was driven.

That doesn’t mean it’s a bad time to buy an investment property. It just means you shouldn’t expect a low price, or that you may not have a lot of properties to choose from. But renters are still renting. If you're buying and putting new tenants into a property, you'll be able to vet them as fully employed and able to afford the rent, so you won't get stuck with rental forbearances.

An unknown is the foreclosure market. Due to foreclosure moratoriums, there have not been as many repossessions. Once those moratoriums pass, there may be pent up activity...people who still aren't able to work, or can't recover financially fast enough may be losing their homes, or selling in a hurry.

This may include over-stretched investors who own too many short term rental properties that they haven't been able to rent out on sites like Airbnb and VRBO. If they were relying on those rents to cover mortgages, they may need to shed properties in a hurry.

Just as when you invest in normal times, consider your goals. If you want to buy and hold, you're probably fine investing now, as long as the property makes financial sense in the current market. But keep the new normal in mind. Investing in short-term rentals or speculating on rising values may not be the wisest move of the moment, but long-term rentals still make sense.

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