Who would want to buy properties at this point in our lives? You don’t know when things will be back to normal. If you’ll think about it, many industries had shut down; construction had stopped, there were supply shortages, and people were uncertain of their future because of this coronavirus. Who would want to spend their remaining cash but those people who know the ups and downs, the ins and outs of real estate investment? Even at this time of suffering, experts agreed that this downside wouldn’t hurt housing. Keep on reading to know why you should invest now in real estate.
Why Real Estate Instead of the Stock Market?
The stock market is a prominent investment. Most people choose it because the stock market doesn’t involve so much time or money to buy stocks. But because of the pandemic, the price is unpredictable, and the return of investment is lower than expected. Also, there are a lot of risks involved. Threats such as market risk(includes the interest rate, equity, currency, and commodity risks), economic risk(provides exchange rate, new government regulations and other decisions that may affect profit), inflationary risk (uncertainty over the future real value of an investment) are only some of the dangers of buying stocks.
Real estate, on the other hand, compared to the stock market, provides a better return of investment, has high tangible asset value, comes with different tax benefits, and, most importantly, the amount of real estate always increases, not devalues. This is why real estate is an excellent choice for investing; it is more stable now than the stock market, which is greatly affected by the pandemic.
It Has a Low Mortgage on Housing
In an interview, some of the reasons they are buying a house now are a desire for more space during the lockdown, a sense that they have an advantage while the market is quiet, the freedom that they can work from home, and most importantly, the low mortgage rate. It is a winning situation if you invest in a property that is profitable as well. You can use a cap rate calculator to assess the return of investment given to you every year. For example, upon ten years (if your cap rate is 10% of a $100,000 house), your net cash flow would be equal to zero, which ensures that you can finally start making money from this investment from the eleventh year on.
Buyers have an increasing incentive, as mortgage rates keep hitting new record lows, and financing seems to be loosening significantly. Federal regulators explain some of the guidelines for the coronavirus mortgage bailout system. In addition to that, governments are now offering a particular mortgage reserved for low to moderate-income families in rural areas.
Many Are Struggling to Pay Their Mortgage
Many of the American renters don’t have the cash to pay their monthly rent due to pandemic. This means that some landlords and property owners are having a hard time also paying their mortgages. This is creating an opportunity for investors. Now Is the time to go on a hunt for low priced properties. There won’t be shortages since more and more establishments like restaurants, hotels and travel-related companies will be tight, or their cash flow and could gradually need to sell rather than close their businesses.
Even though mortgage borrowers have the option under the coronavirus relief act, known as the CARES ACT, to go in forbearance for up to six months and an additional six more months if needed, some property owners still opted to sell instead. Now is an excellent time to invest in real estate property, for there will be a unique opportunity to buy low and sell high in the future.
It Is the Most Stable Investment
Real estate is stable in the long-run relative to other forms of investment. Stocks, for example, are much more volatile and are much more affected by global crises. In contrast, in commercial property, the influence of COVID-19 will not be felt until much later because of its complexity. Another advantage of investing in real estate deals is that, unlike stocks, they are a tangible asset that you can still access – even though the entire valuation depreciates, you’re still left with a financial asset. Real estate is a much better environment for anyone who is willing to spend.
In general, there are more advantages to investing in real estate than the disadvantages. Try to remember that real estate property value continues to go up; the longer you sit on it, the higher ROI you’ll get once the pandemic is gone. What more, another benefit is that unlike stocks, real estate is a physical asset that you can use.
Even if the value depreciates, which is not an often case, you’ll still be left with the property, making it the more practical investment choice. With this in mind, you still have to think, plan, and research a lot before you venture on investing. There’s no harm done in being careful since your hard-earned money is involved.