Rents in Need of Fixing: Recession-Proof Investments

A system that works

Buying lower-priced repairable houses, using your own time and effort to fix them (and that of friends and relatives), and renting them out is a fairly low-risk, high-reward way to build wealth and security. The four main benefits of investing in repair houses are:

1. When you buy a house that needs repair, you pay less for it than for a regular house. Because you paid less, you can get a smaller loan and have lower monthly payments.
2. By doing the repairs yourself (as much as you can), you’ll save money and learn valuable new repair skills.
3. By renting, rather than selling, you now own a home that typically increases in value (by an average of 5% per year) as your rental payments and monthly cash flow increase.
4. By the time you get closer to retirement, your loans will be paid off (or almost) and the now higher rents you continue to receive are like an extra pension for your retirement.

The dangers of buying into homes that need fixing, such as broken plumbing systems, frayed electrical wiring, and cracked foundations, can be avoided with the help of a professional home inspector. Once identified, these conditions can be presented to the seller, who must resolve the issues to the buyer’s satisfaction, or the buyer can back out of the deal.

Of course, it takes a lot of work to find a house, do all the repairs, and learn how to deal with tenants. If it was easy, everyone would be doing it. You will learn not to take life or problems too seriously. Shakespeare said: “A light heart lives long.”

The good news is that you learn valuable technical and people management skills that are useful in many other aspects of your life. He is also rewarded with a feeling of satisfaction with his accomplishments, a greater sense of financial security, and the peace of mind that comes with it.

Fixer-Uppers + Recession = Opportunity

The higher prices and harder-to-obtain loans in today’s real estate market present both challenges and opportunities. In general, the recession can be a good thing for investors in need of fixes for two reasons:

1. Many people are reluctant to buy homes or make major purchases until the economy picks up. This increases the demand for rental properties and allows rental property owners to increase prices.
2. With demand low and supply high for existing homes, prices are coming down. This, combined with the large number of foreclosed properties coming onto the market, makes it an opportune time for investors to stock up on more rental properties.

This could be an opportunity, and Thomas Edison said, “Most people miss an opportunity because they are dressed in overalls and it looks like work.”