We know from past recessions that they bring both a deduction in housing prices and an increase in foreclosures. These two factors combine to make the property market a buyer’s market. While this does present you with a great opportunity, there are several considerations you should make before jumping right in. To help you in this endeavor, we have prepared six helpful tips for purchasing a property during a recession.
Find a Market that Hasn’t Peaked Yet
If you’re after an investment property, make sure that you consider all your opinions by looking at the pros and cons of both residential and commercial property for sale. Too many people approach purchasing an investment property as an emotional decision. Instead, it is best to search for a market with room to grow. In commercial property, this may be a suburb on the outskirts of the city center. In residential real estate, look for suburbs in the vicinity of new developments. For example, property values will likely increase in suburbs adjacent to a big shopping center that’s due to be built or a new tram line that will improve public transport to that area.
Be Realistic About Your Finances
Too many people borrow the maximum the bank will allow, without considering whether they could afford the repayments if interest rates were to rise. You should look at how increased interest rates would impact your mortgage and calculate all other expenses that would apply, such as property taxes and homeowner’s insurance. Consider how secure your job is and what would happen if you lost it. You should also be realistic about the kind of lifestyle you want to live over the next 30 years. A mortgage is a long-term commitment.
Complete a Title Search
When purchasing a property in the United States, you can be liable for any liens outstanding on the property when you buy it. For this reason, it is crucial to complete a title search and consider title insurance. You will be taking on enough expense without putting yourself at risk of inheriting someone else’s debt.
Invest in a Suburb with Long-Term Demand
Even if you are planning to stay in the same house for a long time, you should always consider the resale value. For an investment property, you want to know that it will have a low vacancy rate and that you’ll be able to sell if you ever need to liquidate the asset. As mentioned above, it’s worth researching planned developments in the area and asking realtors about occupancy rates.
Look for Motivated Sellers
Because we have entered a recession, many people have lost their jobs and need to sell their houses quickly. By searching for motivated sellers, you are likely to be able to negotiate a better deal. Remember that you won’t be the only person out there with this strategy, so you might need to move fast to lock in a good deal with a motivated seller.
Know When to Walk Away
One final tip that applies both during and outside of a recession – know when to walk away. It is tempting to get carried away if you fall in love with a property, but make sure you stick to your budget, so you aren’t at risk of foreclosure yourself. If you miss out on one house, you will find another one. It just takes a bit of patience and perseverance.
By doing some careful research and making smart decisions, you’re bound to get a great deal on a new property. Happy hunting!