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The New Rules of Real Estate

The last 10 years has been an extremely consequential time for real estate and real estate investment. We’ve made a drastic rebound from cautious buyers, abundant foreclosures, and hesitant lenders to low inventory, soaring home prices, and stiff competition.

Here are some of the most notable changes that have changed the real estate industry. We’ll also discuss the ways that business minded people can take advantage of these “new ways” to build or expand their real estate portfolio.

Flexibility in the mortgage industry

The real estate industry is cyclic. When there’s an economic downturn, mortgage companies become stricter with their lending requirements. When the economy recovers and picks up, things relax, and lenders become much more flexible.

Over the last few years, the mortgage loan process has become much more transparent. After the housing market crash, the “Know Before You Owe” mortgage disclosure rule was enacted. These forms are easier to use and understand and are provided to buyers at least three days prior to closing.

At the same time, there have also been dramatic changes in interest rates. Over the last few years, we’ve seen historically low rates. While they’ve recently increased over 4%, today’s rates are still much lower compared to the average 5-8% rates from the early 2000s.

High demand, low supply

Today’s market has been marked by shortages across the country. The low-rate environment has encouraged more people to take the leap and become homeowners. With extremely high demand and low supply, the environment has become extremely competitive.

At the same time, low supply can also be attributed to high refinancing rates. Because a growing number of current homeowners are refinancing and staying put, the shortage continues.

Low barrier to entry

Despite what many people think and past trends, getting started in real estate investing and building a portfolio isn’t as difficult (or costly) as it sounds. The fact is that you don’t need hundreds of thousands of dollars to invest in your first property.

These days, there are all sorts of financing options. More often than not, investors just need to put 20% down on a property, and the remaining amount can be financed through a low-interest mortgage.

If you’re unable to get a mortgage, there are other options, including non-recourse loans, personal loans, and hard money.

Surge in real estate technology

Virtual open houses, websites, and mobile capabilities have had a dramatic impact on the entire real estate process for buyers and sellers alike. In the past, agents were limited in the number of homes they could show in a day.

But thanks to technological advances, agents can show homes virtually. The online process of scheduling showings also means more homes can be shown in a day.

With more information available online, there’s a growing need for better marketing and negotiating.

There’s a new busy season

Spring has always marked the beginning of the busy season of real estate. But in today’s world, seasonality is much less of a factor. Instead, buyers are more focused on market conditions and paying attention to the bigger picture.

Typically, sellers are advised to prepare the home during February and March, with an anticipated listing date in April. But as each year passes, buyers are looking to make homeownership their reality earlier and earlier.

How you can benefit from the new rules of real estate

No matter if you’re new to real estate investing or if you’re looking to expand your portfolio, it’s crucial to understand and adapt to today’s market. With the new rules of real estate, here are some ways you can make the most of your investment opportunities:

  • Know your financing options. Don’t let a lack of cash keep you from jumping on a smart investment property

  • Get the inside scoop with the help of a real estate agent or an investment company. With houses selling in a matter of days, it helps to know about properties before they hit the market

  • Use technology to your advantage. Search for properties using home buyer apps. Use the internet to find locals, such as a home renovation contractor, to introduce into your professional network

  • Be ready to buy, or sell, year-round. While some months are busier than other, the fact is that potential homebuyers are shopping no matter the time of year.

With these tips, you can better adjust to today’s real estate market. Looking for a construction contractor for investors? Larossa is here to help with all of your home renovation and flipping needs.

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