Should you invest in foreclosures in 2020? Following the coronavirus outbreak, the real estate market is on pause and many investors are reluctant to invest in such a turbulent and uncertain climate. However, there are many benefits to investing in foreclosures in 2020. In this post, we show you why.
The State of the Foreclosure Market in 2020
ATTOM’s latest research highlights that foreclosure activity is currently declining as many banks are currently suspending mortgage payments. However, there are still several markets in which foreclosure activity is increasing, including – Florida, New York, and New Jersey. As such, these markets offer several promising foreclosure investments if you are looking to grow your portfolio in the immediate future.
In addition, while currently the majority of banks are providing deferments for homeowners, many forecast that we will see a rise in the number of foreclosures when these provisions expire. As a result, now is the right time to keep an eye on the foreclosure and real estate market trends.
Foreclosures Offer a High ROI in a Turbulent Climate
One of the main reasons we recommend investing in foreclosures in 2020 is the low investment and high returns they offer in the current turbulent climate.
If you are still looking to grow your investment portfolio in 2020 but are cautious due to the precarious future of the housing and financial markets, then a foreclosure that offers a high return on investment is a wise asset choice. Bargain foreclosure deals are perfect for home flipping profits or guaranteeing consistent yields by renting to tenants.
However, with social distancing measures in place, it’s also important to be mindful of how potential new waves of the virus may impact any work you need to do on a property. If a new wave happens, construction and renovation teams will likely be somewhat limited in any work they can undertake. As such, take the time to carefully research any renovations or repairs a property may need before you invest. In the current climate, it’s advisable to invest in foreclosures that require less renovations.
Other Asset Classes in Real Estate Are Off the Table
In addition, if you’re the owner of a diverse real estate portfolio – comprised of both commercial and residential real estate, you may find your investment options are limited in 2020. While diversification is key to a robust portfolio that offers consistently high returns, 2020 is the year for caution. Targeting specific asset classes that are more robust in a volatile climate is key to ensuring you continue to make returns on your portfolio investments this year.
In particular, many popular commercial asset classes are looking less sound investment choices following the coronavirus outbreak. For example, 63% of the American workforce are now working remotely and the move to remote work is set to become permanent for many companies – with industry leaders such as Facebook and Twitter already announcing their plans to take the majority of their employees remote over the next five years. As such, commercial office space is quickly losing its appeal for many seasoned investors.
In addition, retail is another asset class that has been hit hard by the virus – with many retail brands now focusing on making the transition to ecommerce and digital marketing rather than brick and mortar stores in the long-term.
In comparison, while residential real estate transactions – from sales to property viewings – are mostly on hold right now, demand for homes is still predicted to outweigh supply in the coming months. Moreover, foreclosure investments are far less expensive than most commercial assets – making it the ideal choice for safe-guarding your capital in volatile times.
Residential Real Estate: The Best Investment in the Current Climate?
With investors non-real estate holdings worth approximately 30% less than before the virus hit – many investors are considering alternative options to stocks and shares for stable, short to mid-term returns on their investments.
In the midst of a stock market crash and dubious commercial real estate investments, residential real estate is a comparatively wise investment. In contrast, residential real estate – including foreclosures – are less vulnerable to fluctuations in the market and can offer great returns.
Foreclosure Investment: A Wise Investment in 2020
Despite any understandable reservations you may have about spending capital and investing in any new assets in the current climate, a foreclosure investment may be well worth your money. Relatively immune to market volatility in comparison to other assets – real estate or otherwise, and offering an excellent ROI, foreclosures are one of the smartest investments you can make in 2020.