The COVID-19 pandemic is exceptionally one of the most impactful events that have affected people’s finances worldwide. It has dramatically wafted the real estate sector big time. There is no doubt that people have become more hesitant to invest in the market because it looks like an unachievable dream for “normal people” who think that real estate requires tons of money.
Still, there are many reasons why you might want to invest irrespective of the economic recession that is still in occurrence. “The best investment on earth will be earth. “These were words spoken by Louis Glickman, and he was right because it still is during and after this pandemic.
Want to Invest in Real Estate? Here are six key takeaways about why you should consider investing in real estate now.
- Real Estate Has Tangible Value
Land, buildings, properties, and equipment are solid assets in nature will always have money value which, if not hampered with, remain constant over a long period. Compared to the stock market that is volatile when the market crashes. I.e., you could stock worth $1000 could suddenly fluctuate and be worth 50$ or zero$ within a given period. Thus, it is feasible to invest in real estate worth some dollars without the fear of change overnight.
- Real Estates Appreciates Value
The land itself will always increase its value regardless of the economic patterns taking place at the given time. In some markets, the land is worth more than the house itself.
Investors in real estate earn their profits by selling properties when the value rises, thus generating rental incomes, high cash flow, and a sense of security over your property.
Due to the pandemic, people desperately need money; thus, they are vending their properties at a cut-rate. As an investor, these will allow you to take advantage and buy properties with discounted prices and profitable deals, which include EMIs on loans, cashbook schemes, and refundable booking amounts, reduced stamp duty by the governments. These will allow you to buy your dream house at economical rates.
- Long run Wealth, Equity and Leverage
Real estate is a long-term investment because the demand for a roof over a head is a basic need for everyone, and it will continue to rise irrespective of this COVID world.
Equity is the money you receive after you pay the mortgage after you sell a house. The longer time you own the home, the more you increase your equity; thus, you have an advantage of buying and owning more properties over the years as the value still appreciates.
Leveraging property is when you decide to borrow a loan or use mortgage money to buy a property instead of covering the total price yourself, which works when your property’s value rises. E.g., a 20 % down payment of a mortgage gets you 100% of the property you want to buy.
When you decide to invest in real estate, profits are not assured immediately but will benefit you in the end and could become a passive income for you.
- An increase in Demand For The ready-to-move-in (RMTI)
Buyers are now considering the RMTIs because they offer benefits like easy and quick loan processes, more like paying for what you see. Investors that are urgently looking for a home do not want to pay rent anymore but instead, prefer EMIs.
Due to this COVID 19 continuing pandemic, some governments have slowed the interest rates on home loans. The time is now for investors to quickly vent into the real estate market and buy their dream home within their estimated budgets.
- Real Estate Offers Tax Benefits
The state and local property taxes are decreased for anyone who owns or buys a home in real estate. All operating costs like insurance, maintenance cost, and property taxes are reduced for anyone investing in Real estate properties.
Source: (Kelly Sikkema/Unsplash)
There is a 15% to 20% deduction on the taxes you pay after selling an investment property or your own home. In some cases, if you use the money gained from selling one property to buy another one, you may not be taxed at all; however, report to the IRS what you have done.
These benefits you do not see anywhere else.
- Take Advantage of the Inflation Hedge
An inflation hedge is an investment that helps buyers maintain the purchasing power of money caused by inflation. Hence, the demand for real estate increases due to the expansion of economies, which later turns into high capital appreciation.
Unlike the stock market, real estate has a natural inflation hedge.
We are all experiencing tough times all over the world today due to the lockdown and pandemic that caused economic recessions, closure of businesses. People have to work from home; thus, this is an excellent time to become an investor.
There is ample time to research and invest in real estate. COVID 19 has proved that saving is never enough; thus, you should always consider being above thoughtful finances and invest your properties for better financial stability, independence, and security.
Do you want to invest in real estate? Well! Here are some simple baby steps for you to get started.
- Ascertain your financial status by accumulating your savings rate.
- Choose one real estate investing plan that will help you move to your next financial stage.
- Pick your target market, if possible, near your home to acquaint yourself with the market.
- Select and create your investment property criteria that you can share with your prospective partners and investors.
- Build a strong team, which should have three sub-teams;
- The inner-circle may consist of a spouse, business partner, and mentors.
- The support circle consists of lenders, property managers, a Certified Public Accountant (CPA), and a specialized attorney in real estate.
- Service Circle is made up of a Closing agent, painter, electrician, plumber, home inspector, etc. They are to help with the functional tasks needed for the investments.
- Program the financing that preferably suits you the most. E.g., conforming loans, portfolio loans, private moneylenders, or seller financing. Choose the one that suits you best.
- Raise money for your first down payment.
- Create a plan to find great deals
- Plan your time and highlight the following action by getting things done.
The above-outlined step will help you achieve and turn your dreams into a reality as real life is fluid. Stay focused, open-minded, and keep learning. Grab this opportunity because your timing is just right, and invest in real estate. Let me know if I can help by leaving a comment below.