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Sunday, March 21, 2021

Investing During a Crisis: Is it a Good Time to Buy a New Property?

The health crisis has been going on for quite some time and with the news that the cases are rising again these past few weeks, it seems that we are now back to square one. 

Initially, we thought that 2021 is going to be our recovery year, however, the current situation with an average of 5000+ new cases per day brought out negative sentiments from the market making the economy dive down once again. 

According to Wall Street Journal, as of March 19, the PSEI YTD is down by 9.85% and this may continue to go down as more lockdowns and restrictions are looming in the next few days. Recent NEDA reports also indicate that the unemployment rate is still at 8.7% while other economic indicators and statistics do not really look good. 

What does it mean for ordinary consumers? 

Given that the market is unstable, shaky, and volatile, it means that economic recovery may take longer than expected. However, this is not all bad. 

"In the midst of every crisis, lies great opportunity" - Albert Einstein

If you are investing in the stock market, experts say that the best time to buy stocks is when the market is down. 

If you are planning to invest in real estate, now is also a good time to invest since the prices are cheap and there are good deals all around. Many real estate companies such as Ayala Land and SMDC are now offering lower monthly amortization and interest rates. 

Is it a Good Time to Invest and Buy a New Property? 

Just like other investments, before you make a decision, you have to be an active investor. Don't be speculative because speculative investing entails high risks as if you are gambling. Instead, you have to study and understand what you are doing. 

In general, real estate is a good investment option as it is tangible and it can produce cash flow without you losing (selling) it. In times that the market is down, leasing or rental income can still continue thus, you do not really have to liquidate it even when the market is unfavorable. Real estate investments can also withstand the influx of inflation. 

To answer the question if it is a good time to invest and buy a new property - it actually depends on your cash flow. If you are planning to mortgage, make sure to check interest and payment computation. There are a lot of free mortgage calculators online. Some even have graphs of loan repayment along with monthly and yearly amortization tables that are very helpful in making a decision. 

Determine if you can afford the monthly payments by estimating mortgage affordability based on income plus your outstanding debts, etc. This will also give you insights into how much you can borrow or how much the bank could possibly approve. 

Thus, as long as you can ensure that there will be adequate cash flow even during a crisis, then it would be a good time to take advantage of the great offers and low-interest rates available in the market today. Having a stable job and  enough savings is a good indicator as well that it is the right time for you to start investing. 

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