Is the U.S. government shutdown really a threat to the current housing rebound? Or, could it provide one of the biggest boosts to real estate investing we’ve seen in seven years?
While there are many sad and negative implications from a government shutdown, it certainly isn’t the end of the world. It isn’t the first time this has happened, and likely won’t be the last. However, when these disruptions come, they create unique spurts of opportunities for real estate investing. It is those real estate investors that get this and recognize how to create responsible and attractive solutions that will win.
The Downside of the Shutdown for the Housing Market
Some have been heralding the woes of the shutdown for the housing market. Some fear mongers have even forecasted a stall in the housing rebound. Of course, in reality, this shutdown is likely to be short lived. Yet, there will be some interruptions. It is important for real estate investors to anticipate them and have a plan for navigating them.
These potential negative impacts include:
- Major slowdown in government loans due to dramatically reduced staffing
- Lenders prevented from approving loans due to inability to complete essential verifications
- Some lenders making poor loans or allowing fraud to slip through, as they fund loans without appropriate verifications
- Closings falling apart
- Government workers and workers reliant on their spending could face income disruption and fall delinquent on loans
- A new round of foreclosures and desperate, highly motivated sellers in the market
The Opportunities it Creates:
Obviously, real estate investors with deals in the works need to take inventory and be alert to the potential issues caused by the above. Call lenders, buyers and title companies to get the 411 and make sure your real estate investing deals aren’t impacted.
For some investors, this may be a big wake-up call to diversify or a pivotal moment for switching strategies.
At the same time, even if this government shutdown is resolved, it certainly creates a window of opportunity for increasing deal flow, finding better profit spreads and even selling and flipping more houses.
Other investors, homeowners, banks and real estate agents that are seeing their deals fall apart as a result of the shutdown are likely in a desperate panic and eager to find a solution. Motivated sellers and agents are just what real estate investors have been begging for.
Start by contacting sellers that chose other offers, title companies, real estate attorneys and real estate agents and let them know you are interested in helping salvage their deals.
If you don’t have the money on hand right now, there are plenty of sources of short term funding for acquisitions and flipping houses.
Next, consider the giant pool of furloughed government workers and the businesses that they normally support with their incomes. Many of these government employees, business owners and workers live paycheck to paycheck and could be in dire straits. Others will be seriously concerned about their futures.
Some may be falling into foreclosure. Others will be waking up to the fact that they can no longer rely on their jobs for income or retirement.
This offers great opportunity for real estate investors to step up with responsible win-win solutions for acquiring homes from distressed owners.