With the uncertainty in the market right now, people take a wait-and-see attitude when it comes to their investments. Even though the federal government continues to release the vaccine, new variants have emerged. So, it may take some time before everything goes back to normal.
Despite this, people have also started to buy homes due to low mortgage rates. This led to increased home prices as people started buying homes to take advantage of the mortgage rates. While the rates went up recently, they are still lower compared to pre-pandemic rates.
But before you buy a home during the pandemic, you may need to consider a few things.
Check the Figures
The first thing to do is to check the figures. Some people buy properties to flip them or holding them for rental. For instance, people who flip houses normally look for around 25 percent after they renovate the house. This allows them to make a decent profit from buying the house. But if this isn’t possible, they won’t buy the house. You may want to consider this if you’re planning to buy and flip the house.
But if you’re planning to buy a house to live in it, you should still check the figures. You need to know the cost of maintaining the house and its future resale value if you decide to sell it in the future. You may also be thinking about buying property to rent it out. In this case, you should check the rent-to-price ratio. If the figure is appealing to you, then you can consider purchasing the home.
But you should also consider that home prices also increased due to the huge demand in the market. So, you should check everything before deciding. If you’re still unsure, you can consult a fiduciary financial advisor about your investment figures.
Take the Initiative
There’s also another way for you to invest in a home without buying it. These instances are mainly for investors who cannot get the equity they want for the property. For instance, if they cannot get equity of at least 20 percent after renovation, they would look elsewhere. The 20 percent equity considers the cost of buying the house, renovating it, and holding it. An investor can lose money if the figure is lower than this, especially if the house’s market value goes down. So, they would rather look for another property to purchase.
But this doesn’t mean they cannot invest in the property. Some investors are willing to get a smaller profit from the house they’re flipping. So, they will not mind if the equity after renovation goes below 20 percent. You can lend money to these investors. In this situation, you didn’t purchase the house, but you are still profiting from it by lending money to someone willing to buy it to flip it.
Take Advantage of Low-Interest Rates
If you’re not a house flipper, you can consider buying property to take advantage of interest rates right now. It may be the best time to buy a home for the family. While they went up recently, they are still lower than the interest rates before the pandemic started.
If you don’t have funds right now, you have until 2023 since the Fed isn’t expected to raise interest rates significantly until that time. You can bide your time until your finances are better to allow you to buy a house.
It’s quite understandable since running a business is quite challenging during the pandemic. But once your business starts to pick up and thrive, you may have the funds you need to buy a home for the family.
Have Capital Ready All the Time
For house flippers, it’s best to have capital ready all the time. The uncertainty in the current market means there may be a deal waiting in the future. This uncertainty also compelled lending institutions to limit lending. And good deals normally come when lending activity hoes down.
So, if you’re planning to flip a house, you can wait for a good deal to come. In the meantime, you can create new contacts in your network. These contacts may provide new opportunities for you in the future. You can also connect with investors with whom you share a mindset. Additionally, focus on safe deals and keep yourself liquid and secure. This allows you to easily invest when you see a good deal.
While investing in a house may be a good decision right now, it will depend on whether you’re a house flipper or are looking for a home to live in. But the conditions are still good due to the low-interest rates that are not expected to increase until 2023.