Nothing seems normal anymore. In fact, we seem to be shifting into a new normal in many parts of the world. This pandemic is testing every part of life and how we do business. Even the real estate industry is seeing changes. This may lead you to ask yourself: Is the pandemic a good time to invest in real estate? Is it a good time to invest in anything at all? I’m sure different people in different locations will have a different answer for you. But plenty of specialists will tell you that it’s never really a bad time to invest in commercial property.
Commercial Real Estate
There are many different types of commercial properties that are both necessary and unchanged by the pandemic. Some of these include industrial buildings, multi-family dwellings and storage facilities. These types of real estate are almost always profitable, because they can be essential in nature. Industrial properties often serve as factories and warehouses that are typically always in production. Businesses are usually on time with their rent, so it isn’t likely that you’ll be chasing down tennants for payments.
Retail property may not be the best bet, however. COVID-19 has many retailers reconsidering the way they do business. There is a big shift to ecommerce and many brick and mortar shops are closing due to pandemic restrictions and safety precautions. This movement is being dubbed “the brick-to-click revolution.”
If you’re a cash buyer, there are more than enough deals to be made, and even if you are working with a lender to invest, there are plenty of deals. Cash buyers can move things along pretty quickly because there is no middle man. Cash buyers have the ability to negotiate “subject to” deals with sellers. This means that the buyer gets the property and its existing debt.
Residential Real Estate
Investing in residential real estate can be a bit riskier than usual during a pandemic, but it can still be a profitable venture. Single family dwellings are definitely subject to the ever resonant, “Location. Location. Location,” mantra. If you choose the right area and you’re paying cash, you are more likely to see a better return and a more efficient compromise. Now may be a good time to have a realtor comb the listings for properties that have been vacant for a while.
If you choose to finance your next real estate investment, you’ll be pleased to know that interest rates are fairly low right now. Even though credit has tightened with the grip of the pandemic, there is still opportunity to be had. For instance, qualified buyers have the ability to refinance for lower interest rates. There is also the option of borrowing against investments currently in your portfolio.
No matter what your current real estate portfolio looks like, you want to stay ahead of COVID-19. It’s a good idea to maintain little to no debt, a high credit rating, have enough money to cover the rent or mortgage of your rental properties and have enough money to cover vacancies and other overhead costs for a year. Happy and wise investing!