There has recently been roughly $4.3 trillion in federal stimulus money handed out by Congress and the FED since the pandemic has hit the U.S. So, as we all shelter in place, we are waiting for the inevitable arrival of inflation to hit us just as hard as the pandemic. It’s probably going to be a buyer’s market for a while, as some home and investment owners look to get out.
Hold on to real estate
I once had a theory that all real estate can be negotiated within our portfolio, and we have always been open to selling our properties to tenants or new and aspiring investors. In today’s world, we will definitely be more closed to the idea of selling. Data from the National Report of Realtors reported that close to 50 percent of buyers are withdrawing, while at the same time there were only 16 percent of sellers doing so… and that was only two weeks ago. This shows that the supply and demand curve has changed dramatically. Thankfully, our current rentals are cashflowing enough for comfort, and hopefully yours are too.
Hold on to stocks
The old theory that you need to buy stocks when they are low, and sell when they are high is an important one to hold strong to these days. As we all watched the stock market plummet these last couple months, it’s easy to feel like you need to get your money out of there, and NOW! However, we have to remember, that’s not a good idea. We are holding on (for dear life) to the money that we have in the stock market. We lost, a lot. We are banking on the fact that we will, eventually, gain it all back, and hopefully a few extra… some day.
The before thoughts of pulling money from our IRAs to put in to real estate has taken a back seat. At least until the courts open back up that is.
Credit crunch- will as much funding available?
With a recession looming, it may be harder to get funding as banks hold on for dear life for current loans to keep getting repaid. With higher risk of rent defaults, lending out more debt means taking on more risk. The financial world has taken a deep inhale to see how this crisis unfolds. Here in Sheridan, Wyoming I haven’t seen any loan stipulations change much, but in the big cities…
Pausing new investments momentarily until courts reopen
As a landlord, it seems like it has been a really long couple of months, wondering what the the first of the month will bring, and hoping renters are able to make rent payments. The only legal recourse that landlords have with investment properties is the eviction process. With courts being closed, that process has gone out the window for the time being.
The reality is, that many landlords have defaulted on their loans because renters have been unable to make rent. Now, more than ever, have we been happy we have strict morals when purchasing investment properties: investing mainly for cash flow instead of forced appreciation.
Gearing up for next investments
When the dust settles, and the health crisis gets back on track, I’m betting it may be a buyer’s market for a while, and we are planning out our next steps as we move forward through this pandemic. With unemployment on the rise, landlords are still going to face the possibility of rent defaults, therefore it will be most important to underwrite rental properties conservatively. Investors are likely to find many great deals on the horizon, and we definitely do not want to miss out, you should not either- don’t give up!
Holding true to old investment strategies
One of our non-negotiables with investing in real estate is to buy properties for enough cash flow. With the possibility of a renter not being able to make rent, it is most important to be able to hunker down in times of crisis.
Tenant screening will prove to be an important asset now as well. It may be time to invest in a platform that can help screen tenants, their backgrounds, and their jobs. It’s time to take a deep breath, boost our savings, and plan for the years to come. One day this will all be a distant memory, and we can reminisce about the great deals we were able to find due to the coronavirus recession.
What tips do you have as we move forward in these uncertain times? How has the pandemic affected your investment plans?
Comment below.
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