Oh, Covid! What a loaded word.
I’m sure everyone has their own unique Covid story. As a real estate investor, I want to share my own personal Covid experience.
In the winter of 2020, I purchased a single-family residence in Union County, NJ through a short sale. A short sale is when someone sells their home and passes the proceeds of the sale to their lender. Often, the proceeds fall short of the debt balance owed, but many lenders agree to accept short sale proceeds rather than advancing to foreclosure.
Renovations were done fairly quickly and I was ready to list the property on March 11, 2020! I felt the world collapsing…
Who exactly is going to buy a house during a pandemic breakout? If you read my previous blog you can guess that at least I didn’t take out a hard money loan on the property as I had already learned the hard way not to incur hefty interest rates by taking hard money loans. This was certainly one good factor here and helped me keep calm as I knew that even if I’ll be sitting with this property for some time and won’t make any money at least I’m not losing money by paying hefty monthly interest payments.
I did have a Plan B in place. I knew that if I wouldn’t sell within a few months, I would rent out the home. If I couldn’t profit from a sale, at least I would have a monthly income generated from my investment.
While Covid wreaked quite a share of havoc on the economy, people’s lives, and world order, there were surprising outcomes in some arenas.
You all know what happened soon after. After being confined to homes during extended lockdowns, people were itching for more living space. Also, with more employees working remotely, people wanted to move farther away from certain cities and traditional job centers.
So while the market froze during the initial pandemic breakdown, by early summer, prices went soaring! And yep, I ended up selling the property for way higher than the list price.
>>>2 Takeaways from my Covid Story
- Short sales present good opportunities for real estate investors. You can search Zillow for preforeclosure or foreclosure properties or search public records for properties that are behind in mortgage payments. You usually need the help of a short sales negotiator but the low price tags attached to short sales make it worthwhile for investors to deal with.
- Even when the market is unstable, you could never be sure how things will turn out. Don’t panic. Have patience and wait it out. But do have a Plan B in place, so that you have an alternative exit strategy.
