The COVID-19 pandemic has impacted our world in dramatic ways – from the workforce shifting to working from home to skyrocketing unemployment numbers. Amid all this turmoil, the idea of starting your own business right now might not have crossed your mind. However, for those who are real estate enthusiasts, now might actually be a good climate in which to start a real estate business. Skeptical? Here are the top four reasons why now can be a good time to invest in real estate.
#1. Lower Mortgage Interest Rates
After the stock market crash in March, the Fed cut had interest rates twice to combat the economic damage caused by the coronavirus. According to the Fed, this move will encourage more bank loans to households and businesses and pump cash into the financial system. And many economists believe that the government will push interest rates even lower throughout the remaining of 2020. For real estate investors, this means that financing a rental property business with a mortgage loan is going to be cheap this year.
Moreover, despite lower interest rates, the volume of mortgage applications for loans used to buy homes is down 24% compared with a year ago. That is according to data from the Mortgage Bankers Association and is something many economists expected since consumer confidence is down in the US housing market 2020. This means that if you’re going to apply for a mortgage for starting a real estate business, there’s going to be a lot less competition. And because banks heavily depend on loans, now they have a large incentive to shift more money into real estate investments.
#2. Increasing Demand for Rentals
As the coronavirus pandemic is affecting the job market and the unemployment rate is expected to increase, more people will need (and want) to live in rentals. People who were thinking of buying and owning their home in 2020 are delaying their purchasing decisions. This also explains why the volume of mortgage applications is declining. As a matter of fact, Forbes reported the homeownership rate for young adults has already been declining to around 35% in the US real estate market. And right now as income stalled, home prices still high, and more people with student debt living in expensive big cities, experts predict that this trend will continue in the coming years.
Furthermore, potential homebuyers have limited housing inventory which makes things even more difficult for them. The fact that there hasn’t been enough housing inventory and home construction in the past decade further proves that there is already a demand for rental properties in 2020. Plus, after the end of the coronavirus, experts predict that this demand will keep going to up until things go back to their pre-pandemic levels. So for anyone who wants to get into the real estate business, now is a good time to take advantage of low interest rates and buy multiple rental properties with little money down.
#3. New Investment Opportunities
While many are worried about the impact of a coronavirus recession on the housing market, experts say that these changes will more likely be in favor of real estate investors. As the pandemic is sending home values down, this presents an opportunity for investors: they can find and buy distressed properties at discount prices! In fact, distressed properties and foreclosures have already hit some housing markets across the nation. If the COVID-19 pandemic last for long, experts predict more to come in the future.
Another thing worth mentioning is that sellers are listing their homes with prices to sell. Meaning, those who are on the market to sell their homes are mindful that now is not the best time to drive a hard bargain. Agents are advising sellers to be accommodating in order to not scare away potential buyers. So depending on your appetite for risk, the coming months might prove to be a good time to buy property and start a real estate investment business.
Plus, you now have time on your side, so you don’t have to rush your search for real estate deals. Never forget that success in the real estate business relies on numbers behind the deal. Make sure to conduct a rental property analysis and calculate your return on investment before making a move. This is something Mashvisor can help you with – To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
#4. Access to Real Estate Business Tools
Some might be wondering how to start a real estate business during the coronavirus pandemic when authorities are urging people to stay home. Well, one of the best things about this business is that you don’t need to leave the safety of your home to find investment properties. For years now, investors have had access to real estate investment tools that allow them to find and analyze real estate deals with a click of a few buttons. In addition, manually running a real estate market analysis and gathering rental comps data is no longer part of investors’ lists of challenges. This is all thanks to the spread of AI, predictive analytics, big data, and machine learning algorithms.
If you want to start a real estate business in 2020, all you have to do is subscribe to a real estate investment software that offers this technology and you’ll be set to go. Mashvisor, for example, offers the best tools to do a nationwide property search, get access to property rental comps, in addition to traditional and short-term rental data if you want to start a traditional or a vacation rental property business. Moreover, if you sign up with the “Professional” or “Expert” plans, you’ll get access to even more features and tools like the data heatmaps, property owner data, off-market property filter, and more. Here’s a quick tutorial on how to use Mashvisor to find rental properties. To learn about your options for signing up for our services, click here.
As a beginner real estate investor, the most important thing to remember now is that you’ve got time and technology on your side. Despite the ongoing worries of a coronavirus recession, there’s light at the end of the tunnel. Right now, more hours can be spent drafting your real estate business plan, doing competitive market research, or simply enhancing your real estate investing knowledge. Plus, investment tools like the ones Mashvisor has to offer makes it even easier to get into the real estate business in 2020.
To start searching for and analyzing the best rental properties for sale in any US market from the safety of your home, sign up for Mashvisor now with a 15% discount with promo code BLOG15.