Covid-19: An Investment Opportunity For Real Estate Investors?

We are now in the third month on lock-down due to the corona virus covid-19 pandemic, both here in the US and most places around the world.

Like most things, the real estate market has very little activity. However at the same time, covid-19 has created an investment opportunity for real estate investors that’s likely to become bigger in the following months.

This article looks at how covid-19 has created an investment opportunity for real estate investors, and what you can do to make the best out of it.

My heart goes out to those who have been directly affected by this pandemic.

Covid-19 has brought misfortunes to many of us, investors or otherwise. It’s also important to realize that it has affected the real estate market, and created an investment opportunity that’s likely to grow in the coming months.

A recent poll showed that real estate is currently the best investment in these uncertain times.

For the last few months, most businesses have been closed except essential services. Most of us have been staying at home, and social distancing has become a normal part of our lives.

Today, most states are gradually opening up economic activity at reduced capacity. We’ll be watching to see how it all plays out – but it will be a while before we can see the pre-covid levels of economic activity.

So how has the covid-19 pandemic created an opportunity for real estate investors?

40 million people have lost their jobs

New figures show that about 40 million people have lost their jobs since the pandemic started. Every week more people continue to lose their jobs.

This trend is likely to continue for a while before recovery begins.

These people cannot pay their mortgages. Luckily, most mortgage companies are currently working with them.

Some businesses have closed down for good

Over 100,000 businesses will not re-open at all despite the huge stimulus package to keep them afloat.

One report finds that about 7.5 million businesses are at risk of closing. Covid-19 has wiped out 10 years of job growth in just a few months.

The people who were working at these businesses will have to look for new jobs. Obviously there won’t be enough new jobs for everyone. It will take a while for the job market to recover.

Those people with mortgages cannot make their mortgage payments. If they don’t find new jobs, they’ll have to sell their houses or they’ll end up losing their homes.

People are reluctant to list their homes for sale

The overall consumer confidence is low, and people are just sitting tight.

Sellers are showing reluctance to list their homes. Social distancing is complicating home tours, inspections and appraisals. Appraisals that took about 7-10 days are reportedly taking about 3 weeks.

In the meantime, buyers have already started pulling back from the market, tilting the market to favor buyers.

We are now in a buyers market – a situation where there are more homes for sale than buyers for them.

This is will push house prices down, in the process creating an investment opportunity for real estate investors.

Mortgage companies have offered forbearance

Most mortgage companies are offering forbearance to people who can’t make their mortgage payments.

Forbearance occurs when your mortgage company allows you to suspend making mortgage payments, usually for a few months.

When the forbearance period ends, they’ll be required to pay the unpaid balance in full, or they’ll have to modify the mortgage so the unpaid balance becomes part of the mortgage balance.

They can then resume making payments in the modified plan.

Most mortgage companies will allow forbearance for up to 12 months – potentially till around March of 2021. Not everyone will wait that long though, and we are likely to start seeing more activity in the real estate market in the coming months.

Expect an increase in foreclosures

If people who’ve lost their jobs won’t have new jobs, they’ll have to sell their houses fast or lose them to foreclosure after their forbearance protection is over.

This will drive prices down further, creating a huge buying opportunity for real estate investors.

So as real estate investors, what can you do to prepare for this and make the best out of it?

1) Prepare your real estate buying systems

Now is the time to tune up your buying systems and make sure you have everything in place.

a) Cash in the bank

If you can have some cash reserves, this will definitely help. At the very least, you’ll need some money for down payment.

b) Line up your lenders 

If you’ve not already done so, now is the time to line up the lenders for your business.

Your mortgage companies, hard money lenders, private money lenders, transactional funding, etc should all be in place and ready for buying opportunities as they pop up.

c) Real estate investing website

If you don’t already have one, now is the time to get a platform that will process requests from potential sellers.

A good SEO optimized real estate investing website makes you visible in your local market. Motivated sellers will be able to find you when they need to sell their houses.

It will also place you as a solution provider when motivated sellers need help – this will attract more real estate deals for you.

Follow our guidelines on how to choose the best website for your real estate investing business.

d) Build your buyers list

If you are a real estate wholesaler, keep building a list of cash buyers for wholesale properties.

This will come in handy to cash out of those deals quickly. Of course you’ll need a good website for this.

2) Learn and be flexible

Don’t stick your head in the sand. Keep learning and adapting to the changing market. You’ll be able to identify more opportunities as they pop up.

3) Keep looking for deals

As usual, keep looking for deals. You never know the best opportunity to bite. Don’t be shy to make conservative offers that will be profitable for you in the long run.

As the economy and real estate market slowly opens up, real estate investors who are prepared will good find investments that will benefit them both in the short and the long run.

I wish you the best in your investing business!

About the author

Simon Macharia invests in real estate in Dallas Texas. He also runs Interactive Real Estate Investor Websites, built to attract leads, engage and nurture them by in-built automated email so they become ready to close deals with you.