And that’s completely understandable. After the incredible damage that COVID-19 has done to the world’s economy, the idea of a prolonged recession (or maybe even depression) doesn’t seem too far-fetched. If there is a large enough spike in coronavirus cases, we could be looking at the worst-case scenario.
However, that doesn’t necessarily mean there aren’t investment opportunities in that kind of economic environment. The real estate market could be a safe financial bet. Why?
This Isn’t 2008
As everyone with real estate experience remembers, the recession of 2008 was one of the most stressful times in our industry. While Canada didn’t get hit as hard as the United States, there was still no doubt that people were hurting when it came to their homes.
Thankfully, the current economic client isn’t the same as it was over ten years ago. The subprime mortgage crisis was the cause of that recession, but this one was brought on because of the damage caused by the virus. That’s one of the reasons why the real estate market has been so resilient in 2020. Yes, there was a drop earlier in the year, but now sales are as robust as they were in January.
So, if you plan to invest in real estate even after another country-wide economic hit, you’re still going to be investing in a much more stable market than 2008. Our investment team gives excellent advice. Get in touch today, and we will advise you based on your individual needs and goals: +1 844-977-2679
Foreclosures Can Happen
"In Canada, foreclosures are actually rarer than you might think. Some lenders, such as banks, may bring up the idea of foreclosure to get borrowers to make timely payments. More often than not, lenders don’t want to go through the foreclosure process. In fact, it’s expensive and time-consuming, as they often need to go through legal proceedings, as well as selling the home at auction or putting it up for sale at a lower price than it was originally, resulting in a loss of profit."(LoansCanada.ca)
If the economy gets worse, foreclosures on homes across the country are a definite possibility. However, this could be a good opportunity for passive real estate investors rather than a downside.
For one thing, lenders are often very eager to recuperate their loss, meaning that they want to sell these foreclosed properties as quickly as possible. This situation could result in lower prices but also makes buying harder for the inexperienced investor.
When you purchase a foreclosed home, all backdated taxes, mortgage payments, and liens on that home will be forgiven, as they would make it more difficult to sell the property. It’s an ideal situation if you plan on being a landlord or want to flip houses as, again, you will have more money left over to boost the resale value.
If you’re looking for foreclosure deals in major urban centres like Toronto and Vancouver, you are unlikely to find them. Those markets are so hot that home foreclosures usually go for the same price as their regular counterparts. By working with real estate experts that know the area well, you might be able to uncover a gold mine before it gets snapped up.
However, if you are looking in some significant but less inflated real estate markets, you might find some real deals when looking at foreclosed homes.
Get Professionals to Take Care of It
Buying a foreclosed home often comes with many more risks than purchasing it from the owner. That’s one of the reasons why we recommend that, if you are planning on investing in foreclosed homes, you do it passively.
Unlike regular home sales, you purchase foreclosed homes in their current state. In other words, what you see is what you get. There is no possibility of including extras in the purchase or negotiating upgrades. This means any renovations or repairs will need to be handled by the buyer. If you’re considering a 100% real estate investment, that means the burden will be on you 100%. If you become a passive real estate investor with us, that means the responsibility will be 100% on us! But the reward is split with you. With our experience, that’s a great deal for a first-time investor or someone with less time on their hands.
The process of buying a foreclosed home can be considerably more complicated. Doing it alone would be a massive headache. When you have a realtor or professional real estate investor handling the transaction, you can be sure that everything will go smoothly, including inspections and appraisals. Heck, we might even be able to get the property at a better price!
Get in touch if you’re interested in becoming a passive investor or an investment partner: info@regalwayhomes.com | +1 844-977-2679
How Will You Get a Return on Investment in a Recession?
In a recession or depression, you might think that fewer people will be purchasing homes. And you’d be right. However, this scenario will lead to more people renting their homes rather than buying.
By purchasing a foreclosed home, fixing it up, and renting it, you will be bringing in a steady income that could eventually pay for the house. That could deliver a fantastic return on investment over time, especially once the recession ends and people start looking to buy homes again!
Foreclosed properties come with more baggage (so to speak) than most real estate purchases, but they can often be worth it. That’s especially true if you have someone handling the deal for you, like Regalway Homes. To learn more, book a consultation with us today. We aren’t in a recession yet (and hopefully won’t be), but that’s no reason not to be as prepared as possible when it comes to investing in real estate!