The onset of the global pandemic had a significant impact on the US real estate market. Many metro areas witnessed noticeable drops in home prices and sales. However, the market conditions have been showing visible signs of improvement since late May.
Prospective homeowners who were putting off purchases due to the pandemic can finally participate in socially distant viewings and online listings. Experts assert that buying conditions are almost as good as they were two years ago.
We interviewed Chicago-based real estate investor and entrepreneur Winston Deloney about his favorite investment lessons.
Do You Believe in a Debt-Free Investment Approach?
I’d say leverage can work to the investor’s advantage when prices rise, but investors may end up sustaining significant losses if the market falls. It may be a good idea to avoid leverage if you are new to real estate investing.
It’s also essential to verify if your investment’s inward cash flow income can cover the loan interest costs if you’re buying with borrowed money.
I think all investors should study the “real value” of the property before investing. Consider factors like the property’s location and condition.
It’s also critical to ensure that the property is not mortgaged and that there are no pending legal disputes connected with the property.
How Do You Deal With Downturns?
I believe the most severe mistake to avoid during real estate downturns and “bubbles” is falling prey to expensive loans that you cannot afford to pay off in the long term. It’s imperative to observe the market right now since the economy is just recovering.
Avoid gambles and speculations altogether if you have the choice. I think it’s best to use this time to build cash reserves, plan your future real estate strategies, and network. If you plan to invest during a downturn, pick the safest deals and the best properties.
How Do You Identify a “Good Deal” in Real Estate?
In my experience, there are no one-size-fits-all solutions in real estate. The real estate market conditions could change at any time.
Property values may undergo frequent changes. However, there are some primary factors that all real estate investors should consider before investing.
The property’s location matters a lot. You could use online listing sites and other digital tools to identify high-demand areas.
It’s vital to go out of your local comfort zone and explore other real estate markets in your city.
What Asset Protection Strategies Would You Recommend?
As a passionate real estate investor and entrepreneur, I realized the importance of real estate asset protection strategies early on. I would strongly recommend full-coverage insurance for all real estate investments.
You must consider insisting on a renter’s insurance coverage if you let out your property on rent. You could deflect considerable financial losses by opting for asset protection methods like property insurance.
I would also recommend to stick to rental properties vs other types of real estate investments, since historically, they have been proven to really build long-term wealth.
Is Now a Good Time to Invest?
US bank mortgage rates saw historic lows this year, and the low mortgage rates could send property prices soaring. I think it’s best to really explore more real estate investing options and choose a conservative investment approach till we have more clarity on how the market will respond to new post-Covid changes.