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  • Investing In Real Estate In A Recession

    It can be scary to invest in anything during a recession.  We all have visions of the great depression and bread lines and people selling apples.  The idea of putting your money into anything other than a mattress can be frightening.  However,  real estate should never be looked upon as an ordinary investment.

    Real estate is one of the few investments that we actually not only can use, but need.  Everyone needs a place to live.  And real estate has systematically proven to have risen in value over the past several decades.  Yes, you are paying interest in a mortgage for your home, but you are also getting a tax write off for the interest as well as a write off for any property taxes that are paid.

    The mortgage rates have not been as low as they are now since the 1960s.  This is an ideal time to purchase real estate and take advantage not only of the low interest rates, but also the low prices on homes.  Because there are so many more homes on the market than buyers, the price of homes in most areas has fallen considerably.  On top of that, people who overextended themselves in the early part of the century are finding themselves in foreclosure.

    Now is the time to buy and buy cheap.  Do not feel intimidated by a real estate agent who tells you that you are going to “insult” someone if you offer a low price for a home.  The real estate agent wants you to spend as much as possible because they get a commission off of the sale.  Use your head and take a look at the market. When you are buying a home in a real estate recession, consider the following:

    Is The Home In Foreclosure?

    If the home is owned by the bank, you should be prepared to offer a lot less than the asking price.  Do not allow a real estate agent to sway you when it comes to making an offer.  If they use any tricks such as “I do not want to present such a low offer,” tell them that you will find someone else who will.  Real estate agents are a dime a dozen, especially in the market today.  If the home is in foreclosure, offer at least 20 percent less than the asking price.  At least.

    How Long Has The Home Been On The Market?

    A few years ago, a home that was on the market for several months was either priced too high or there was something significantly wrong with the home.  Nowadays, homes stay on the market for 90 days as a matter of routine.  Never make a really low offer on a home that is fresh on the market unless you know the home is in foreclosure or about to become foreclosed upon.   Feel free to make low offers on those homes that have been on the market for a month or so.  Those that have been on the market for a year are owned by people who are willing to wait out the storm and will most likely not be sold  for a low price.

    Why Is The Owner Selling?

    You can find this out by directly asking or looking around.  If the home is in a state of disrepair, chances are that there are financial problems.  You can offer a significant amount less.  If the owner has another home that they are buying, you can also offer less.

    Make sure you do your homework and do not be afraid to invest during a real estate recession.  Contrary to what you may have heard, this is the best time to buy a home.

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