In reaction to the stock market drop, the Fed dropped interest rates to 0%. What that means for flippers is that interest rates are at an all-time low. Getting that rate may be very difficult, but it’s still a great time to borrow money because houses are more affordable for you as a flipper and for home buyers. Although social distancing and the rise in unemployment may seem like a major deterrent, buyers also recognize this unique opportunity to get such low rates. As a result, there will be home buyers particularly those looking for lower priced affordable homes.
The volatility of the market has emboldened some to buy more, but also scared many from the market to something safer and more predictable: real estate. With the lowest interest rates ever, you’ll see more money available from private lenders and more people looking to get into real estate.
With the limited access to supplies and decrease in labor, builders won’t be able to build and supply is slowed. About 30% of building materials come from China, so even if building resumes in the States, the supply will most likely be hindered from overseas. With this lower inventory, it leads to an environment for faster flips and multiple offers, great for flippers.
Although short-term rentals are taking a severe hit, this can also be a time to find sellers who don’t want to or are unable to withstand this time and put their properties on the market at a discount. Short-term renters will return and rentals, in general, may be in higher demand as many will be unable to afford their homes due to the loss of employment. Furthermore, the supply of new properties be it single resident or apartments will take a dip from lack of supplies.
There is one caveat with this optimism and that’s to look for lower priced homes because as you go up in price, the inventory increases and the demand decreases. Focus on affordable, lower priced homes. Good luck and stay safe!
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