What to expect as we roll into Summer

The last 15 months have been the strangest period in the real estate investing field.  From panic in March of 2020, lockdowns and shelter in place orders, a historic seller’s market and lack of inventory, historically low interest rates, crazy rising material prices, and out-of-stock home improvement items.

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I would have hated to start my real estate investing career in early 2020.  But if you’re reading this it’s because you made it through and you continue to plug along and are smartly seeking knowledge from other informed investors.

So what should you expect the remainder of 2021?  In our opinion, really good things.

For fix and flip investors, the mortgage forbearance is starting to end throughout most of the country.   Which means there are going to be millions of households who no longer will be able to afford their mortgage as they have either lost their job, lost hours at their job, or simply decided that work isn’t for them.  To be clear, a very sad thing for people in the first two groups.  That last group, the work-isn’t-really-for-them group, is a real thing as millions of people have re-evaluated their lives as the pandemic unwinds and they have decided life is too short to continue to chase the all mighty dollar.  This is going to offer opportunities as people with equity will be looking to sell and people with low or no equity may simply fall into default and enter into foreclosure.  And speaking of foreclosure, again, not a happy thing, but the eviction moratoriums are beginning to end and accordingly, sheriff sales will soon be starting up again.  And County sheriff sales are a huge real estate investor resource for procuring properties.  So expect buying opportunities to return.  On the downside, the cost to complete a rehab has gone up approximately $10-15 a square foot due to rising material costs.  At some point these costs will come back down, but most likely never return to pre-pandemic levels.

For rental portfolio investors, it’s predicted that because of the rising cost of building materials, demand for rental properties is going to explode as young buyers are not going to be able to afford housing.  So pay attention to your leases and don’t be afraid of a short term vacancy when compared to the ability to raise rent 20-30%.  This is going to be a really good environment to be a landlord.

And long term, we have an idea, but since our housing fundamentals, economic fundamentals, and manufacturing fundamentals have all been turned upside down in the last year, we’re going to decline to offer any long term opinions.  We can’t be wrong if we don’t predict.  But related to this point, please take time every week to research the fundamentals that affect your business so that you make proactive decisions, not reactive decisions.  Happy hunting the remainder of 2021.

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