How to Protect Yourself from a Possible Real Estate Market Crash
Every investor knows that a major economic or real estate crash is always around the corner. It has happened countless times before, and it will happen again. Years of hard-earned savings and retirement funds go down the drain when it hits. A Hinsdale real estate attorney will tell you the same and can help you diversify your portfolio.
The good news is that you can save yourself from a potential real estate crash by following these tips:
Avoid Financing Plans That Ask For Zero Down Payment
Real estate financing plans always offer incentives to attract buyers. One of the most common ones is a zero-down payment plan. If you opt for this plan, you essentially get a loan without giving a financial investment in return. The loan providers own the house you are paying for with your mortgage.
Since you don’t own any of it, your house will be sold immediately to cover those loans, and you will be homeless if the real estate market crashes. Avoid such plans so you don’t end up suffering. Instead, go for ones that require a 10 percent to 20 percent down payment rate, so you have some equity over your house.
Diversify Your Portfolio
Shield your real estate investments from a serious bear market by diversifying your portfolio. As per your age and the amount of risk you can take, spread your retirement savings across stock mutual funds or exchange-traded funds. Plus, always be prepared to move a portion of that money into another location if a real estate crash is imminent. You will suffer otherwise.
Also, consider investments with different risk levels, such as derivatives, annuities, stocks, bonds, and precious metals such as gold. This includes a small interest in an oil and gas project. You can have something left to cling to if the market goes under by spreading your wealth.
Pay Off All of Your Debts
If you have a lot of debt when the market crashes, you may not be able to recover. Before that happens, liquidate some or all of your holdings to clear them. This includes credit card debt and consumer loans that demand high interest.
When the market crashes, at least you won’t have to worry about creditors breaking down your door. Make sure you pay off a large chunk of your mortgage if you are making house payments. It will reduce your monthly obligations across the board, and you can breathe a sigh of relief.
Contact Dan Walker Law Office for Real Estate Investments
If you are in the market for a new home or need to add more options to your portfolio, you need a Hinsdale real estate attorney from the Dan Walker Law Office in your corner. We have more than four decades of experience helping clients reach investment milestones and can help you too.
This includes preparing contracts, negotiating sales of or purchases of homes, commercial properties, and even vacant lands. We have also represented clients aggressively in court for boundary disputes, easements, property titles, and more.