Investing In A Recession: The Key Is Commitment
Commitment can be defined as an intellectual tie to a course of action
, which is exactly what is needed if you are looking at investing in real estate during a recession. Any big purchase can drum up that sense of doubt or anxiety, especially when money is tight and the economy is slow, but those who are on top of the game know that commitment is where all the money is made.
There are five basic reasons why commitment is needed during a recession if you are serious about investing in real estate and all of them skip boldly across one dotted line.
Best Deal
The top real estate investors know that the best houses come out of a recession period for one simple reason; foreclosure. These houses, along with HUD and other fixer-up type houses are some of the best deals that you will ever find and the recession only makes them better.
The only problem with these houses is they move quickly, so you must find the house that you want to invest in and act quickly. You may have that sinking feeling in the pit of your stomach; "What if there is something better out there?" There very well may be, but by the time you find it, not only will that one be gone, the one you were looking at will be snatched out from under you like a bad table trick.
You must commit to the house that you know you have the ability to turn around and make profitable. Work with your Realtor(R) to have a basic contract set up ahead of time, this will allow you to carry it with you and make a few simple changes then submit it right away so you do not waste time. The worst thing that could happen is to loose a house to a competitor who is at the house the same time you are.
Best Price
Between Short Sales, Foreclosures and people trying to get out of their mortgage payments, recessions are the best time to take advantage of the super low prices on real estate. Bargaining is your best tool and throwing out a number below where you would normally feel comfortable is a good start.
These days' banks are accepting less than normal because they are saving more money by selling the house than foreclosing on it. Commit to a price that you will be able to turn around and rent or sell when the market swings the other way.
Best Rates
Recessions are also the best time to lock in the lowest interest rates to make payments lower than ever and reduce the amount of interest on loans. The trick is playing the market and waiting for the lowest rate; that bottom point, right before it starts to rise again, ensuring you get the best deal for your money.
When you think the rate is the lowest, you must suck up any doubts you have that it might go lower and jump in. No matter if the rates go higher or lower, you made the right decision. Commit to whatever decision you feel is best for you and your financial situation.
Recessions are the best times for low rates, so no matter what your rate is, you will always end up better than when the market turns around. A 5% interest rate is always better than an 8% interest rate.
Best Labor
If you are buying a property that needs some fixing up, or some land that needs to be cleared, a recession is the perfect time to do it. The reason you want to purchase when the recession is at its lowest valley is because money for every other commodity will be extremely tight.
With this being said, labor will be cheap; dirt cheap because everyone will be looking for work and trying to out-bid each other to get any job they can. The best way to get on a labor crew's good side is to pay them extra if they do a good job. If you commit to them, they will commit to you to make sure you come back to them next time.
Best Return
If you were committed to the best deal, paid the best price, got the best rates the market had to offer and scoped out the best labor you could find, it simply follows that you would get the best return on your investment.
That is what recession investing is all about. All it takes is commitment on your part and a little blue ink on a long white piece of paper, so pick up the pen and commit to your future today.
by: Volker Weiss
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