Due to the disruption of our normal daily lives by the Covid19 pandemic, the real estate businesses have seen the advantages and disadvantages of investments. Due to the fact that investors or real estate start-ups are limited to move around, remote work is the new approach to scour the internet for deals. The loss of rental income creates desperate measures by landlords. While real estate properties are down in certain areas, median home prices are up 8.5% to as much as 25%.
Moving out of the big cities
Big cities like New York and San Francisco are losing many of their young professionals as they cannot return to their corporate offices. This pushes these young professionals to look for cheaper places to rent. Most are moving to warmer places to seek out furnished housing for short term living. The advantages are due to online-work integration by the corporate offices.
Eviction notices creating an opportunity
Some landlords are not getting paid as their apt/home rentals are not able to make payments. This is giving these landlords no choice but to send out eviction notices in states where the renters are not protected. In some cases, the landlords are making difficult decisions where they have to put up their properties for sale.
Rental places where the utilities are included with the rent are shut off. This situation causes the renters to move out and the landlord to stop maintaining the property because they can’t keep up with the costs. The market value for such properties can be offered well below the asking prices. This is a big advantage for investors or start-ups.
Investing gone bad
There are investors who invested in properties and see themselves as big losers. This disadvantage is due to the lack of basic or proper research. No one saw Covid19 was going to be a pandemic that will hinder their investments. In places where they invested in, were probably not economically strong, and when this pandemic hit, it affected the area severely. But do we blame them?
There is a yes and no for this. People who were just trying to invest in areas, thought they can get some good return on their investments. This was probably because the money available to invest, was all they can they can afford. This, they imagined will grow overtime where they can invest more and more but turned out to be the opposite.
Things I would consider before investing
If you have money to invest, you need to do some basic research to get the best return of your money. With the right ideas and research in the area of investing, the probability of being stable through a pandemic can be on the break even or slightly on the higher side.
This is what I would do if I’m investing in an area that I have researched. Let’s say that I bought an apartment complex, I would create a short-term agreement clause about rent adjustments for my renters. I would offer each apartment unit for rent at $400-$500 below the normal monthly rent. Just make sure you do a proper credit history check on your renters.
Also, this will build a better relationship with your renters, knowing that you understand the current situation that is affecting everyone.
Don’t be greedy
Investing in properties and having to break even is a no brainer. Don’t be greedy but try to understand the current situation. By temporary offering your new renters a lower monthly rent until this pandemic is over, will help you stay afloat. This way you don’t have to panic and sell your investment properties below the market value and lose miserably. I rather have something coming in than just zero return on my investments.
A good place to start investing is in the median home areas. The income of these people in these areas are steady and have little impact during most crisis as I have researched.
Other real estate reset opportunities to look out for
While many landlords and home/apt renters’ properties are being affected by the Covid19 pandemic. Other areas of the real estate sides are hit hard as well. The restaurant owners, hotel owners, and newly completely built homes are becoming financially weak too. Cash strap investors have the opportunities to grab these properties by offering to buy them way below they actual value.
Disclaimer: I am in no shape or form to give advice on investing. The ideas expressed here are solely of my own opinions and is not responsible for any loss incurred by you if you decide to invest in real estate. You are aware that any or if not, all investments involved risks. Therefore, it is best to seek advice from a reputable advisor to help you decide if this approach is for you or not.
Conclusion
If you have cash lying around and you are thinking about investing in real estate, it is best to do research on the areas before buying any property. You might see a property that is very cheap in an area, but at the same time it depends on the economic situation there. You don’t want to invest and not see any return on your investment. It’s like buying and selling it cheaper than the price you’ve paid for as it’ll become a failed investment.
The best thing about a well-researched area is that you can buy the property or properties there without worries. As things get better you can sell them for more than the price you’ve bought them for. This will help you collect a greater return on your investment. But that can take time and will require patience. If you are trying to invest and rent the property out, then that might be a slow but steady return on your investment. It will all depends on how much you can afford on the investment and the return you are trying to achieve.
A smarter way to look at this is: Buying them cheap and flipping properties will equal time and patience. This is actually a short-term investment. Buying them cheap to just renting it out is more like a long-term investment but with a slow return on it. If it wasn’t for the pandemic, we wouldn’t have a real estate reset. The properties now are cheaper to invest in. Now you are able to find such opportunities on a broader scale.
What do you think about the advantages of prospering from a pandemic? Would you invest if you have the spare cash to do so? Please share your thoughts or opinions if you may. I wish everyone a healthy and wealthy lifestyle.
Cheers to health and wealth,
john@healthy-and-wealthy-lifestyles.com
