The time to start investing is now. The economy is heading toward a downturn, and a recession feels almost inevitable. Yet, even in a situation like this, there are still silver linings. One of the silver linings for people looking for investment opportunities is that the real estate market is now favoring buyers.
Real estate remains popular with investors because it is best to have your money in assets that will appreciate even in a recession. There will always be a need for land and buildings. The right piece of property bought on the cheap now could make you a serious profit down the line.
Be Prepared
The first and most important step is to be as prepared before seeking out investment opportunities. Research the backgrounds of sellers and agents, make sure your finances are suitable and liquid and look up similar properties to the one you want.
Looking at similar properties will help you determine if the asking price is acceptable or if you can negotiate it down.
Also, keep in mind that buyers who take the initiative of being pre-approved for their mortgages will have an advantage over someone who has not taken that step.
Once you have identified a list of properties, arrange a second walkthrough each building with a home inspector.
Work With Professionals
A professional inspector will evaluate how much work you will need to put into any renovations the property might need.
This inspection should happen before you sign anything as the inspector’s final report will decide if the property is worth the investment. Keep in mind that property in good shape is likely to get a better insurance rate.
You might want to put a lawyer on retainer so that you can streamline the whole process. Once you have chosen a property and agreed on a price, having a lawyer on board will expedite the paperwork and reduce waiting times for you to a much more suitable amount.
Seek Out a Reliable Realtor
Realtors depend on commission, and their business can slow down a great deal during a recession. The realtor will be just as motivated as you to find you the property you want, as the sale will benefit them.
Sometimes, realtors will even lower their commission to make the deal sweeter for you. This can significantly reduce the overall asking price, so make sure to find a real estate agent that you get along with well.
It might be better to work with a freelance realtor or a small real estate firm as they have less red tape and maybe more amenable to negotiating commission rates. If you used the same firm to sell any properties you currently own, they might offer you attractive discount options for future property purchases.
Avoid Emotion-based Investments
People who want to sell off properties during a time of economic upheaval are likely to try to drag your emotions into the purchase. This is a huge red flag.
Never buy a property where the seller tries to draw your focus to how many other people want it.
You do not need to get involved in a bidding war, and you are not in a hurry.
Take your time to determine if the property suits your needs. A seller who is in a hurry is free to choose another buyer’s bid. You can just as quickly find someone who will give you the time you need to make a well-thought-out purchase.
Seek a Clean Title Transfer
Avoid buying a property where you can not be sure if the title can be transferred cleanly. A desperate enough seller might hide any financial liabilities and liens that are attached to the property. These liens will transfer with ownership and can be a very nasty surprise.
Make it very clear to your realtor that they must prove that the title can be transferred cleanly. Ask your lawyer to check on the type of insurance the title will incur.
Choose the type of title insurance policy best suited to what you intend to do with the property and fit within your budget.
Be very clear on what you expect from this investment. Making a large investment during a recession can be risky, so you must be prepared to absorb that risk in whatever form it might come.
Knowing your end goal and being prepared to see it through in the long-term will serve you well. Patience and preparedness can be the deciding factor that helps you recoup your investment with a sizable profit.