Is real estate investment the way to go during the COVID-19 pandemic?
This question has been on the mind of many investors, and in this article, we’ll give you a quick rundown on why purchasing a rental investment property is indeed a lucrative and safe option to go for, and how you should manage the endeavour.
It’s been nearly a year since the pandemic sent the US economy reeling, and it’s been incredibly difficult to put a finger on what the best way to make (or preserve) money is. The stock market has been highly volatile and many people feared that the housing market would see another crash like the one we saw a decade ago … and for good reason.
Currently, millions of people have lost their jobs due to the pandemic’s aftermath, and it’s virtually impossible for a lot of them to pay rent. Landlords all over the country are struggling because of this. And while the eviction moratorium that’s currently in place is necessary, it makes real estate investment seem like an absurd option.
How you can navigate real estate investment during the pandemic using ‘subject to’ investing
‘Subject to’ agreements may just be what you need right now. It’ll make a real estate investment far easier and appealing than it was before the pandemic broke out.
The stock market’s volatility has meant everything slowing down, and a lot of stocks have plummeted. Some real estate markets have seen a similar trend, which is to say, this is the perfect time to get your hand on some rental investment property if you’re able.
This is where ‘subject to’ investment comes in.
What is ‘subject to’ investing?
We’ll try to break down ‘subject to’ investing so you never have to search up its meaning again.
To put it shortly, this agreement means that you purchase a house instantly from an owner. However, the mortgage stays under the seller’s name. You pay the mortgage for them. And the house becomes yours.
The main benefit you get here is that you don’t require any financing to acquire the house. All you need to do is pay the owner in cash, or through any means that they agree on, and voila! That’s all there is to it. You don’t need to apply for a mortgage since the original owner already has one. You can simply keep paying off that mortgage until it’s paid off completely, and that’s all there is to it.
This comes in especially useful if you’re unable to get your hand on mortgage rates that the original owner of the house has. If the owner has a lower mortgage rate than you could possibly get, and they’re willing to sell their property, that’s a lucrative deal for anyone who can afford it.
Cash buyers are at an advantage when it comes to real estate investment
As we mentioned earlier, the current economic situation has created a lot of distress. That means there are lots of homeowners who need quick money, and they’re willing to sell their house if it means quick cash.
Time is of the essence for them, so if you can help them out of their tough financial situation, you could pay for the current equity of the house immediately and assume ownership. Then, you’ll have a great mortgage rate on your real estate investment that you can keep paying off at your leisure.
Houses cost money. Maintenance is expensive, and most owners in distress are looking for a way out of being a landlord right now. Lots of homeowners are on a collision course with foreclosure since they don’t have a means of income. It’s the perfect, once-in-a-lifetime opportunity for a good real estate investment that’ll pay dividends as time goes on.
Keep in mind that if you’re somehow unable to pay the mortgage, you’ll also experience foreclosure and the house will go back under the possession of the original seller. It might not be a huge deal right after you’ve purchased the property, but suppose you’ve been paying the mortgage for 10 years. It’ll be a huge disaster if you experience foreclosure then.
So, all you have to do now is look for a landlord who’s in distress because of their financial situation, and strike a deal with them. You may pay slightly more than the actual equity of the house, but it’ll be worth it because of the low interest rate. So, in short, ‘subject to’ investing is great because you’re:
- Bailing out a landlord who needs immediate help.
- Getting a great rental property investment.
- Saving the property from foreclosure.
There aren’t any downsides.
In summary, real estate investment is a great move right now
Imagine you had invested in property back in 2004. You would have gone through the housing market crash, but that catastrophe didn’t last forever, did it?
The market came back and real estate prices soared higher than ever before. Real estate is always a safe investment, and while things might be looking down right now, the market will definitely come back soon, and that’s why you should invest in rental property if you have the chance to do so. Its value will keep appreciating as time goes on.
One thing you should consider is real estate investments inland. Avoid coastal cities like California, if possible, due to the extremely high prices and anti-landlord sentiments in the region. You’d do much better with investments in New Mexico or Texas, etc.
If you’re worried about the current eviction moratorium, you could always consider our Guaranteed Income Plan, where you get your rental income regardless of whether you have a tenant living in the property or paying rent. This way, you’ll have a carefree real estate investment experience and avoid any liabilities that come along with being a landlord. Our property management services will ensure that you never have to worry about your rental property as we’ll take care of everything, from maintenance to tenant screening.
If you’d like guidance on how to make the perfect real estate investment, or have any question, feel free to contact us!