Even though the pandemic has upended many aspects of our lives, many investors are finding that now is a great time to invest in real estate. With the changes to what has now become the “new normal” there are many new rules and regulations, including in the real estate market. Here are some important things you should know before taking the leap and investing in real estate.
Real Estate Is a Reliable Investment
Historically, real estate has been a reliable investment. Even though the pandemic has created a sense of instability in many people, the truth is that home values continue to trend in a relatively normal manner. While commercial real estate is experiencing some turbulence, residential property offers many great investment opportunities that should continue to gain value over time, especially as many workers are finding that with working remotely they need more room and need to move. Because of these reasons, residential real estate is one of the safest investments in the industry.
Location Location Location
When investing in a property, whether you intend to renovate and flip it, or to keep it as a long term rental, you have to do the math to make sure you are going to get a good return on your investment. One of the best ways to ensure that you will have ample opportunities to get a reasonable return on investment is the home’s location. Remember that the location needs to suit the type of people you are likely to rent or sell to. For instance, if your property is a condo likely to be purchased or rented by younger people, you want to pick a location close to gyms, local bars, restaurants and public transportation. If you are buying a home in the suburbs though in the hopes of attracting families, consider things like public parks, local grocery stores, and good schools. Consider who you want to target and what they will be looking for before making the important decision of where to invest.
You Are Going to Spend a Lot of Upfront Money
For the first time in a long time, many mortgage lenders are demanding 15-20% deposits as a result of COVID-19. If you are a cash buyer, this won’t be a concern, but if you are relying on taking out a mortgage for your investment, this could be important. If you are in a position to offer a high deposit straight away, then you will be in a strong position. These substantial upfront costs could be a deal-breaker for some investors, so this is something to consider before starting the process, and definitely, something to research before you act.
Do Your Homework
The residential real estate market can be a safe investment. With the financial difficulties facing many potential buyers and renters, make sure you select a property in a great location that people can’t refuse. Lastly, if you need a mortgage for your investment, consider the substantial upfront costs involved.