My, how things have changed – quickly! If you are still investing, I’d like to hear how you’re adjusting and what you see for the longer term . I’ll start with some of the Covid changes we’ve already made.
NOTE: Much of what I share is what we’re already experiencing and changing in our own business. Much is predicated on our 2008-2010 land investing experience.
Don’t stop. Historically, land always works, you merely got to adapt to plug changes. Therefore:
learn about and secure funding
stay involved in online networking groups – both local and national – to remain au courant changes you would like to remember of as they happen.
We’ve increased our marketing. Why?
People are getting to need money which suggests selling their personal or family members’ properties. We want to be available when a need arises to offer what help we can.
There are fewer investors buying already due to fear of the longer term and lack of funding, so there hasn’t been a far better time to be within the market in years!
Get educated. What we have seen recently is strictly what we experienced in 2006-2007; everyone was stepping into land investing because it had been very easy . As the business becomes more difficult now, those who are prepared, informed, and educated have incredible opportunity.
Buy for less. We all know the future holds uncertainty. Price values may drop greatly within the coming months/years. Sellers know that, too, which is why many will want to sell sooner instead of later. They also realize that you are taking on their risk once you buy, in order that they understand once you offer but they hope for. And, it’s true, you are taking on risk. Make sure when you make an offer that it’s a price you can live with if the value drops over the next 3-6 months.
Properties are still selling well, so buy properties you’ll turn quickly – this is often not a time to shop for large rehabs!
Buy and sell virtually. This is the right time to find out the way to transition your business to virtual. We are currently doing due diligence online, asking permission to walk around the property and take photos, then asking the seller to either send us interior photos themselves or to leave the property while we enter and take photos. Sellers appreciate our concern for their well being. We are requiring that they allow a property walk-through before closing to insure their own photos do not omit something we should know about.
Prepare for longer days on market when selling. Watch your local property days-on-market to possess a thought of what to expect. As lenders begin to dry up and/or increase their borrowing requirements, there’ll be fewer qualified buyers and both selling and closings will take longer.
Expect lenders to tighten borrowing requirements.
We’ve already seen private lenders stop lending thanks to fear of future risk and a requirement to stay their funds secure for themselves.
Many hard money lenders have stopped lending all together because they were bundling loans and selling them. Those loans are not any longer being purchased, so those lenders are not any longer lending.
Banks have stopped offering jumbo loans, which suggests they’re already concerned and responding.
Pretty much anyone still lending has begun requiring that the borrower has more funds on hand, higher credit score, and is a stronger applicant all the way around. Plus, they’re increasing points and interest rates.
Higher priced properties will be the first to slow, so focus on the properties that are below your area’s median price point (and know what that price point is!).
Expect this “event” to last for a short time – possibly years. In 2008, the common response was that the worst was over and things were getting to start recuperating . “Things”, however, continued to get worse.
Remember, we’re very early within the “new reality” and what’s coming is tough to predict. Stay aware, stay flexible, stay informed, stay in touch with other investors. There’s always money to be made inland.
Do you agree/disagree with what I’ve shared?
What changes have you ever made or does one decide to make going forward?
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