When you go shopping for real estate in the middle of an economic downturn, you can guarantee that whatever you buy, you’ll make a profit. There are certain parts of the country that take a little longer to be affected when a recession hits, but sooner or later all places will start to feel the pinch, which means you can basically stick a pin in the map when you’re trying to decide where you want to go. make your investment.

Of course, just because you can make a profit anywhere doesn’t mean you shouldn’t take steps to maximize that profit. If you were sitting in the middle of a giant room of candy that was yours to take absolutely free, would you choose Godiva chocolate or M&Ms? When you have to choose between a property that will make a minimal investment and a property that will make an incredible profit when the economy starts to grow again, choose the property that will give you the best return. !

Where are you going to find the best deals? Urban properties and houses in the suburbs of these urban areas are always in higher demand than those that require a long drive to reach the essentials of life. Houses in the Washington, DC suburbs will sell for a higher profit (and much faster) than a house in a small town like Rexville, NY. (Don’t worry if you’ve never heard of it, most of the rest of the world hasn’t either!)

When you first start investing, it’s generally recommended that you choose a property close to home, where you get to know the neighborhood, the general vibe, and most importantly, what’s selling! If you choose to do your own rehabilitation, this is particularly important, as there are many areas in the country that are particularly prized for their historic value and that will generate a much lower return on your investment if they have been stripped down and decked out in the latest style than if they were. they would have been carefully restored. An experienced rehabber will know this. A beginning investor will not.

Other factors you may want to consider before closing the deal are:

o The quality of the neighborhood. Unfortunately, all urban areas have their slums. An area with a high crime rate, a large amount of graffiti and property damage, regular drug activity, and daily visits from the police will be much less desirable to a potential buyer than a home in a better part of town. where they can allow their children to walk out the front door without having to worry about them not coming home.

o The state of the house. There have been many, many investors who dove right into the world of real estate and rehab and bought a handyman special only to find that when they were done paying for the repairs on the property, the profit margin was considerably less than what they were expecting. they expected. expected, and what they would have gained by investing in a property that required a little less work.

Before you commit to buying a property, take the time to have it carefully inspected. Certain factors, such as a leaky roof, faulty foundation, termites, and extensive mold, will be difficult and expensive to fix. Unless you can literally gain ownership of a song, justifying the amount of time and expense you’re going to invest in the restoration project, it may be best to let that happen.

o What do you plan to do with it next? This is probably the most important factor when it comes to investing in real estate, because what you plan to do with the property after you buy it makes all the difference when you determine which types of properties are suitable and which are not. If you plan to rehab a property and then resell it as a single-family residence, buying a small country house on the outskirts of town can be a perfectly profitable proposition. You may be able to sell the property for more than you paid and justify the investment.

On the other hand, if you plan to rent the property, you’ll want to research the neighborhood’s current rental rates before you can determine investment success with any degree of accuracy. There are some areas where income-based housing lowers the median rental price for the neighborhood, which is good news for renters, but could be a major downside for the investor who has paid hundreds of thousands of dollars for a property that They are just going to buy. be able to rent for a couple hundred dollars a month.

The moral of our story? Take the time to carefully consider your options and do your homework before closing the deal, no matter how attractive that deal may be.

Of course, if you have been investing in real estate for the last ten years, none of this is new to you! Seasoned investors who are familiar with things like market trends and identifying weaknesses in potential properties will find the buffet of low-priced real estate laid out before them a tempting proposition, and reach well beyond their immediate demographic limits. it can offer a new wealth of possibilities for huge profits. gain.

Just remember that investing during a recession is a slightly different proposition than investing when the economy is booming. You’re going to hear me say this over and over again, because it can’t be emphasized enough: When you’re investing in real estate during a recession, you’re investing for the long term. Many of today’s real estate investors have made their fortunes in the market by taking advantage of the “Now, now, now!” mindset and invest and dispose of real estate in a very short period of time. When the economy is strong, it’s not unusual for a seasoned investor to be able to buy and sell a property in the space of a week in less than a month. Any property you invest in during a recession can stay in your possession for several months before you can earn a maximum return, because the goal of investing during a recession is to buy an asset at the lowest possible price and sell it when the economy picks up again. increase.

It’s rare for the seasoned investor to find themselves in this situation, but it’s quite possible to get too spread out when the temptation of pages and pages of available properties was too much to resist. Suddenly, they are responsible not only for the amount they paid for the initial investment to purchase the property in the first place, but also for the taxes, rehabilitation, and maintenance required to keep it in good repair and prepare it for sale.

Try to stick with a realistic expectation of what you can afford in the long run. If as the recession continues you find you have more than enough capital to buy a couple more properties, you always have that option, but getting rid of a property you can no longer afford during a recession can be more difficult than taking a submarine and going. diving for Atlantis, which is why investing in real estate during a recession is so lucrative to begin with.