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Investing During a Recession

Should you consider investing in buying a house to flip if there is a recession? YES

I bought my first flip in 2008.  The timing for my purchase did not have anything to do with the market.  The timing was based solely upon me. I had made a decision and done some education and research and felt ready but it still took nearly 9 months for me to get that first house under contract.

The opportunities to make money in house flipping and real estate can exist in any type of market.  While some may say that we are headed for a similar real estate event like 2008, there are others who have a different perspective and feel it is worthwhile investing there.

The last time the housing market crashed was largely due to the fact that homeowners were issued loans that were low cost and low barrier to entry but then increased over time.  There were also looser guidelines for verifying income and employment. At the same time, home builders had built an excess of homes that were hit hard with a reduced value once the lenders and buyers excited. 

There are many who believe that the increase in the housing market over the past several years is different.  Primarily, there is more demand for homes than a supply. People want to buy homes and be homeowners but there are fewer houses for sale.  That creates a very different type of market that will potentially respond differently. When you couple that with the historically low-interest rates and there are still opportunities for buyers. 

For those who are already homeowners, the demand has likely increased the value of their homes creating true equity as compared to 2008 where many people had little to no equity in their homes.    

An area where we could still see an impact is with unemployment and consumer confidence.  When there is volatility and uncertainty, that can alter plans for a home purchase which is something to consider when investing.

After weighing all the factors, I knew that it was important for me to simply get started.  I also believed that housing will also be in demand. Especially when you have a good product at an attractive price point.  

Here are the factors that I considered when investing:

  1. Low purchase price in an area with a modest resale price
  2. Renovations that could be done to add value but that did not require adding bathrooms or additional living space
  3. A smaller house with a smaller renovation budget could be completed sooner to minimize holding costs

There are still developments to come and other signs to watch but these fundamentals are solid too.  At the individual level we may also see certain markets fare better depending on the local economies and industries that support the residents.  Whatever the future holds the one thing we know is that there will be potential. Research and educate yourself now to be prepared for these new opportunities.  

Want to buy a property and renovate it?

Looking to buy a house to renovate? Check out the fixer upper checklist to help you find the perfect house.

Invest during Recession, House flipping, home renovation, selling a house for profit, real estate

For more inspiration for home renovations, follow me on Pinterest @thresholdhomesmn

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