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Investing in real estate is probably one of the top strategies in building wealth and achieving financial stability.
Rich old folks in my hometown have real estate investments practically all over the country, aside from their regular businesses. They have built buildings, condominiums, and townhouses, practically guaranteeing them and their heirs steady passive income in the future.
Having your own real estate property, especially if you are leasing it and is generating income, will guarantee your security during times like the Covid-19 crisis. There is no doubt then that investing in your own property during the Covid-19 crisis is so worth it.
However, should you to invest in real estate, especially in the midst of the Covid-19 crisis?
Here are three things you should consider when investing in real estate:
YOUR FINANCIAL STABILITY
Getting a real estate property involves a large amount of money.
My husband and I have recently purchased a condominium here in our hometown, and although we were confident that our savings will cover most of the expenses that we will incur and besides, we will be getting a mortgage anyway, I was still floored with the payments we need to make before we could get our property title:
- Down payment,
- Closing Costs, and
- Expanded Withholding Tax and Documentary Stamp Taxes on the Contract to Sell, Deed of Sale, and Deed of Real Estate Mortgage.
How Much Will Be Your Down Payment?
Before even considering owning a piece of real estate property, you should make sure you have available cash for the down payment.
How much? The bigger your down payment, the smaller will be your monthly mortgage payments,
Dealing With Monthly Mortgage Payments.
After we got our property, we had to deal with the monthly mortgage payments. Pre-Covid-19, we were able to meet our monthly mortgage payments with no worries. During the Covid-19 crisis, honestly, having to meet the monthly mortgage payments on time is a nightmare!
Our investments in the stock market have plummeted and we have to withdraw what little we have left to cover our mortgage payments. Aside from the monthly payments, we have to deal with city property taxes, repair fees, insurance, homeowners’ membership, utilities, and interior decoration of the unit.
So here is some Mortgage-related Advice.
If you are taking out a loan, make sure your monthly payments do not exceed 25% of your take-home pay. Otherwise, you will be struggling every month to produce extra money for your other expenses.
This mortgage calculator which my husband and I used before plunging into getting our own condominium (which we intend to rent out) helped us calculate our mortgage qualification based on our income. Although meeting the monthly mortgage payments during this crisis is quite a struggle like I told you earlier, being aware of what mortgage payments we can afford based on our income really helped.
Thus, get into real estate only when you are confident that you have saved enough to cover all the expenses involved in acquiring your real estate while making sure that your savings can still cover more important expenses such as food and children’s education.
Having your real estate property does not just require money. You also need to invest your time.
We bought the condo and we are intending to lease it after the interiors have been done. Naturally, supervision is needed while the condo is being fixed and we need to be there, physically, to oversee the improvements to be done.
After that, we have to know who will rent our property, make repairs, and make the property look good. Managing the property can take much of our time.
The ideal time to buy rental properties is probably when you can afford to spend time on handling the property. In our case, our children, except our youngest, are already out of their teens and we don’t need to monitor and look after them like we used to.
Opportunities During a Crisis
Regular folks would think that purchasing a real estate property during the pandemic is absolutely not viable. The risk is just too great.
What if the Covid-19 crisis will last for year?
What if the economy will never recover?
What if nobody will rent my place because we are always on lockdown?
For other people, they turned the crisis into opportunity.
Instead of waiting for the crisis to end, they took advantage of low property prices, aggressively bought and developed properties.
Considering this, if you have more than enough for your basic needs, I advise you to use your extra savings get into real estate. As time goes by and the economy improves, your asset that you bought for a low price will double in value.
Is it ideal for you to invest in real estate during the Covid-19 crisis? If you have the means, I definitely believe that now is the ideal time to invest in real estate, especially after considering your financial capacity, your time, and your opportunities during a crisis.