Education and news for smart DIY landlords!
Based on a statistic by The Mortgage Reports, single-family home prices in the United States have reached a record high with an average of $320,000+ last 2020. It’s even expected to go higher this year. While this might scare most investors off from buying a property, some say that the rising price could be a sign that investing now is highly profitable.
This is probably because it might take longer for our daily lives to return back to normal. But there are two questions you should ask yourself as a real estate investor: “Should you ride the trend and compete with other investors?” or “Should you wait for the right time to maximize your profit margin?”
A lot of buyers are in the market looking for a place to settle in during the pandemic. This means that competition is fierce. It’s even harder to capture the attention of a seller with your offer because it’s spring. It’s best to wait until the fall and winter months to send an offer. Property prices are also expected to drop during these months.
When there is high demand with low supply, stock prices will rise. Most if not all the houses you’ll take interest in will cost a lot. This could be a bad sign for real estate investors who want to maximize their profit margins.
But as mentioned, it’s best to wait until the colder months when most buyers are not sending offers to sellers. These months are also best for getting the best deals because sellers are motivated and most of the time they reduce the prices of their properties.
There are a lot of cities and towns experiencing influxes of residents looking for a place to settle in. Don’t rely on these signs because they only mean one thing - the local housing market is volatile. This is a good sign for stock traders because exchanges are done fast. Whereas in real estate, property trading is much slower.
The best indicators you should look out for when studying the local housing market of the property you’re interested in are high employment rates, good health of businesses, and the development of public facilities in the surroundings. If these signs aren’t promising, then you should find a property for purchase in a different area with a stable community.
The federal reserve lowers mortgages due to the economic decline caused by the pandemic. This is a huge advantage for buyers who plan to finance their property purchase through a loan or lend. However, going back to #1 and #2, this encourages fierce competition in the buyer’s market.
If you want to take advantage of the lower mortgages in a buyer’s market, you need to be the early bird when it comes to sending offers. Preferably, start house searching in the first month of the year or book the buyers during December.
Every other buyer has prepared all the necessary underwriting including a lender’s pre-approval to beat other competitors. You should too. This is a good way to show sellers that a transaction with you is smooth and quick thus making you a top priority on their list.
Due to the price of existing houses for sale this year, other investors are looking to build new homes on bought lands. The problem is, the prices of raw materials and labor fees needed for construction have become expensive as well. Laborers and contractors are also in demand.
In addition to these dilemmas, there is no dropping of prices even if you wait during colder months and construction isn’t available. So if your plan is to build a new home or wait until raw materials and labor are cheaper, you’ll have to wait until the pandemic is over.
Your financial capabilities and how you plan to use the property will guide your buying decision this year. If you’re an investor strapped for cash, you might need to wait and pay all your debt first.
If you can afford to buy a house and have a pre-approval letter ready then by all means send your offer to buyers. You can also choose to wait until housing prices drop. This year is highly profitable to those seeking to invest in rental and house flipping. It’s because rentals and houses for sale are in high demand.
For those looking to buy a home just for living in, then you might want to wait because you’re going to pay for more than the usual.
To make a solid decision on whether to buy a house, wait for the right time, or how to be a top priority in a seller’s list, read here: