2 Ways to Ensure You Correctly Buy Real Estate In 2022s RE Climate.
The Adage " In real Estate You Make Money When you Buy" is more important to take note of, if it ever has been.
There is a 27% prediction of a recession in the next 12 months and over 50% chance of a recession in the next 24 months according to Moody's Analytics chief economist Mark Zandi. The risks keep moving higher due to the Russian invasion of Ukraine.
It's very important to be mindful of what price we are ready to pay for real estate should the market trend downward in the next 2 years.
Most people that have money put aside are pressured to invest in real estate as soon as they can. Being an inflation-proof asset, the need to own a piece of real estate yesterday becomes more important than ever before.
Here are 2 strategies that might help you lock in a great price in today's inflated market.
1. Buy a Manufactured Home.
Although prices of manufactured homes have gone up along with everything else, they are still not tied to the impossibly high prices that real estate is demanding right now.
Raw land tends to sit on the market way longer than land that hosts a livable structure on it. This lends itself to a more moderate increase for a parcel of raw buildable land.
Now might be a good time to buy a piece of raw land and have a manufactured home delivered to it.
Many lenders are unwilling to finance a manufactured home that is not a primary residence. However, I have found 3 lenders that are willing to finance a manufactured home for use of an investment property. They are also willing to do one closing on the land in addition to the manufactured home. (This is only possible if the seller is willing to wait the extra time for the home to be delivered and installed on the property).
Don't expect to get rates that compare to traditional lending when doing an investment loan. However, it is possible to get funding through FHA and VA loans if the house is used as a primary residence.
1. Vanderbilt
Has a built-in partnership with Clayton Manufactured Homes
Owned by Berkshire Hathaway, they will work with low credit scores but has higher interest rates
Low-interest rates if you meet their credit standards.
The cost of a manufactured home is roughly about $160 a square foot compared to $250+ a square ft in other markets. To be fair, this does not take into account the cost of the land as well as the cost of getting the property ready for the installation of the home.
Still, this might be significantly cheaper than buying a stick build home in todays current market.
Here are 3 lenders that are willing to work with financing a manufactured home that will be used for investment purposes.
Another way to approach investing in todays market without paying top dollar is to invest in international markets.
Take Mexico for example. I just spent time reading Mike Lambert's posts whom I found on the BiggerPockets forum. It's well worth the time reading his take on how the housing market in Mexico is more realistically priced. In part, this is due to the unavailability of cheap 30/yr mortgages that we are accustomed to in the USA. It is quite difficult to get financing for foreigners in Mexico. This leads to a healthier housing market that reflects prices that people are willing to pay right now in cash without overpaying and relying on a 30-year mortgage.
Buying a home in cash is definitely more of a strain on short-term cash flow, but cap rates tend to be much higher than what is traditionally found in the USA real estate market.
Let me know if you tend to disagree with this article. If you know of any other creative ways to purchase real estate in todays market, please share them with me.
Best,
Jacob
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