My Advice To Real Estate Investors During These Unique Times
Know the new rules!
The rules are changing every week for REALTORS® when it comes to COVID-19 precautionary procedures. As of writing this on April 24, 2020 it is imperative for REALTORS® to ensure their clients have not been showing any signs of sickness. The importance of a healthy client goes for both Sellers and Buyers. If a Buyer or Seller does not disclose potential symptoms before entering or allowing someone to enter their house, they could be held legally accountable if anything were to happen. Business does not have to stop, but if you are under the weather it is best to stay home and wait for it to pass!
Real Estate Appreciation During the Pandemic
Investors buy Real Estate for Cash Flow or Appreciation. Each of these two aspects intermingle to an extent but appreciation will always be the difference between a good investment and a fantastic investment. Investors look for cash flow, but most buyers will not invest unless they see the potential to sell their asset for more than they bought it for after a certain amount of time. COVID has opened many investors eyes to the possibility of 0 appreciation or even depreciation in their Real Estate. In our uncertain times I would recommend assessing your real estates ROI without factoring in potential appreciation. Find desirable Real Estate, but if your ROI is not where you want it to be without applying an appreciation in value, I would recommend you keep looking. Edmonton is filled with good opportunities for cash flow in relatively inexpensive neighborhoods – in these unstable times we should not rely on future appreciation for our investments to make sense!
Is Cash-Flow King?
Should I purchase a cheaper asset in a less desirable neighborhood, or a more expensive property in a more desirable area? A cheaper asset will produce more cash flow, but it’s always viewed as the riskier option, your monthly costs are low, but the vacancy rates could be much higher. While buying real estate in expensive high-quality neighborhoods has proven to offer low vacancy rates and long-term consistency; but the large mortgage makes your monthly costs before income much higher. As a large or small investor COVID has taught us to reflect on what $0 of income from your assets for several months in a row could mean to you personally. Would you be able to handle the expenses of your investments if they stopped generating income? If not, what steps can you take to mitigate this before investing?
If you’d like to discuss real estate investing with me 1 on 1 please get in touch!