COVID-19's Impact on Real Estate: 6 Top Local Realtor Share Their Perspectives With These 24 Tips
Yolanda Huo April 28, 2020
With growing concerns about the spread of COVID-19, various industries have been affected due to the collapse of the economy, and real estate is one of them. Knowing that many investors are confused about the current investment market, LAMOSE is very concerned about this, as there are always some realtors ordering gifts for their customers from LAMOSE. Therefore, LAMOSE interviewed some top local realtors and asked their ideas based on the current situation. The following are 24 tips that these realtors want the investors to consider amid the period of COVID-19. This will help you be more clear of what you should think about and what decisions you should make under the current investment market.
Stephen Lau, BCom, LLB, REALTOR®
RE/MAX Real Estate
Cell: 780-905‐8282 [call/text message] LinkedIn:www.linkedin.com/in/stephenlau
WECHAT I.D.: slau7809058282
Buying real estate (as a primary residence) is a good investment if:
- You intend to live in the city for the long‐term
- You have stable finances
- You are buying in a location that is attractive and easy to rent out when you decide to upgrade to a larger property
Before investing, there are three tips that you should consider:
- Renting for the long‐term is usually a bad long‐term investment. You are making your landlord rich and are not building home equity for yourself. If you find yourself loving the city you live in and do not anticipate moving cities due to work, consider investing in a property. Over time, you will have paid off your home and only have to pay utilities, property taxes and maintenance costs.
- The economy in Alberta is quite unstable. The oil economy is in disarray and job security is hard to find. If, however, you work in a career that has high job security, NOW might be the best chance for you to find a good bargain when buying a property. It is a strong buyer’s market and there is a great opportunity to get a property that may have been outside your budget before COVID‐19 affected the market. People are often selling properties for different reasons: marriage and children (upsizing), divorce, death in the family, relocation or financial difficulty. With many people losing their jobs, worries about being unable to pay one’s monthly mortgage costs in the near future is a top concern. While most banks presently have mortgage deferral options available (~ 6 months), homeowners who have high living expenses (e.g. car loans, etc.) may feel it is safer to sell their homes for a low price to get out of their financial stress and obligations.
- As always, real estate prices are determined by “location, location, location”. If you are buying a property, it is critical that you consider the attractiveness of the area. Is the property located in a safe, convenient area where there is always a strong demand for rental properties? For example, a condominium located near the University may hold its value better than buying a condominium in the far suburbs where there are many “mass produced” properties. If you needed to sell your property in a “bad market”, you would likely have many competing properties fighting for the same buyers as you are! Buying a property in an area with strong tenant demand may also allow you to keep the property as a long‐term investment, allowing a renter to pay off your mortgage.
Address: 6211-187B Street, Edmonton, Alberta T5T 5T3
Before investing, there are three tips that you should consider:
- To invest appropriately, it is important to know the new rules! The rules are changing every week for realtors when it comes to COVID-19 precautionary procedures. As of writing this on April 24, 2020 it is imperative for Realtors to ensure their clients have not been showing any signs of sickness. The importance of a healthy client goes for both sellers and buyers. If a buyer or seller does not disclose potential symptoms before entering or allowing someone to enter their house, they could be held legally accountable if anything were to happen. Business does not have to stop, but if you are under the weather it is best to stay home and wait for it to pass!
- What Has COVID-19 Taught us About Appreciation? Investors buy Real Estate for Cash Flow or Appreciation. Each of these two aspects intermingle to an extent but appreciation will always be the difference between a good investment and a fantastic investment. Investors look for cash flow, but most buyers will not invest unless they see the potential to sell their asset for more than they bought it for after a certain amount of time. COVID has opened many investors eyes to the possibility of 0 appreciation or even depreciation in their Real Estate. In our uncertain times I would recommend assessing your real estates ROI without factoring in potential appreciation. Find desirable Real Estate, but if your ROI is not where you want it to be without applying an appreciation in value, I would recommend you keep looking. Edmonton is filled with good opportunities for cash flow in relatively inexpensive neighborhoods – in these unstable times we should not rely on future appreciation for our investments to make sense!
- What Has COVID Taught us About Cash Flow? Should I purchase a cheaper asset in a less desirable neighborhood, or a more expensive property in a more desirable area? A cheaper asset will produce more cash flow, but it’s always viewed as the riskier option, your monthly costs are low, but the vacancy rates could be much higher. While buying real estate in expensive high-quality neighborhoods has proven to offer low vacancy rates and long-term consistency; but the large mortgage makes your monthly costs before income much higher. As a large or small investor COVID has taught us to reflect on what $0 of income from your assets for several months in a row could mean to you personally. Would you be able to handle the expenses of your investments if they stopped generating income? If not, what steps can you take to mitigate this before investing?
Address: 1128 Lake Twintree Drive SE. Calgary, Alberta T2J 2T1
1. What has COVID-19 taught us about current real estate technology?
- Current tools that some agents provide to their sellers that help buyers visualize the home without ever having to leave the comfort of their homes are services like a 3D tour that offers a “doll house” view and also a “3D panoramic” view that enables you to walk through the house, look up, down and side to side as if you are in the house. The only thing missing is opening up doors and closets. Companies like Matterport offer the platform and it’s up to the agents to get on board and provide this service to every listing.
2. What has COVID-19 taught us about real estate and video?
- Video is a realtor's best friend! Many agents have a hard time coming to terms with being on camera and offering video to buyers and sellers. It is an absolute must with the current situation to have your agent agree to offer video tours or live stream showings. It is a lot safer for both buyer and seller if one agent can preview a home with his or her clients at the safety of their current home and direct the agent to show and tour them through the house. Tools like Zoom, WhatsApp, and Facetime are a great starting point and make it easy enough for the agent to record and share or stream live.
3. What has COVID-19 taught us about writing and accepting an offer？
- As a buyer or seller you always want to feel like your interests are protected. Your agent should advise you about the terms and conditions you should use or accept depending on which side of the transaction you are representing. If you are a buyer and have found that perfect house through pictures, 3D tours and video walk through with your agent but still feel the need to see the home, ask for a condition that the sale is subject to you actually viewing the house and it being acceptable to you. If you finally get to see it and don’t love it you can choose to send a NON WAIVER and end the contract. On the flip side as a seller this might be another layer to get through but in the current situation I would suggest accepting such a condition in hopes of getting a possible sale especially with a slowing market and nervous buyers. Sometimes giving a little can go a long way during negotiations and get you to your ultimate goal of SOLD.
Three tips before buying amid COVID-19
- Be patient, take your time and if you do see the home you love, DON'T BE AFRAID to pull the trigger and write an offer. You have nothing to lose when writing an offer, but do listen to your Real Estate Agent when discussing the offer price.Far too many buyers wait too long, hoping for that home to drop in price significantly, most often than not, that home goes pending before you are 100% ready.
- Make sure to use the market to your advantage, use a professional Realtor to secure the best deal. Most buyers are unaware that it doesn’t cost them any money to use the services of a Real Estate Agent when purchasing a home or investment property.
- Purchasing any piece of Real Estate, it’s a massive investment, make sure not to cheap out when it comes to getting the home inspected, using a good lawyer and other professional services. Some discounted providers will give you discounted services, don’t look for a couple hundred dollar discount when trying to cover all your bases.
Three tips before selling amid COVID-19
- Don’t sell if you don’t have to, unless you are looking to buy a bigger property. Real Estate is one of the most secure investments in the world. The value will definitely go up sooner or later.
- DO NOT overspend putting bells and whistles into upgrades when touching up your home. In today’s market specially, buyers are looking for a great deal. Make your home presentable, put lots of sweat equity but do not spend thousands on Reno’s.
- If you are thinking nobody is buying currently, I would definitely check the market statistics again. With more homes coming off the market with the worry of Covid-19, buyers will have fewer options to choose from. Discuss what steps your Real Estate Agent will take to make sure both you and your family are 100% safe when showing your property to buyers.
Cell: (647) 282-9706
FB: Kokilan Maheswaran Real Estate
1. Is your investment for short or long term?
- One of the most important components to investing is understanding your timeline. If you are investing for the short term (ex. Buy, Renovate & Flip), understand the costs after purchasing the property, and have a backup plan in case you are not able to unload the asset for the desired price (ex. Leasing the property).
If you're investing for the long term, understand that real estate is a long game. The potential appreciation, rentable incomes & paying down a mortgage is much more important that worrying about the noise and fear in the market.
2. Isn’t buying real estate for the price of 2019 a good deal?
- Although the number of sales have gone down, it is obvious that some buyers and sellers want to stay away from potentially getting infected; the overall sales price has been stable compared to 2019. Also since there is less competition, if you are an active buyer; it only helps you the best.
3. You won’t know until you try. Everyone wants a good deal, who doesn’t?
- If you find a property, do your due diligence to get your financing and inspection in check. A good deal is not always about the price. Once you have the above in place, get the ball rolling with preparing an offer on paper. Show the seller that you are serious. Getting a good deal is like applying for a job, you don’t get the job you always apply to; but you just never know.
ICI Source Real Asset Services
Before investing, there are three tips that you should consider:
- For Real Estate investors, one of things that can affect profit is maintenance. Owners should budget 1.5x rent for the annual budget. The inspection is important. Look out for systems that will have higher costs and shorter life. Homes need to be painted to attract quality tenants.Keep an eye on the numbers, rental income, cash flow and mortgage.
- For strata properties, their condition is becoming even more important with the increase of strata fees and hike in insurance. It’s important to check how much money is in the contingency fund and operating budget.
- Find the Right Location, When choosing a profitable rental property you should look for a location with a decent school district, and plenty of amenities, such as parks, malls, restaurants and movie theaters nearby. In addition, a neighborhood with low crime rates and a growing job market may mean a larger pool of potential renters. Make sure it's a location that is immune to the ups and downs of the market.
Wish these 24 tips above solve your confusion more or less. Please feel free to contact us by firstname.lastname@example.org or any realtors above if you still have questions, LAMOSE is always here to give you a hand!
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