As you might expect, these uncertain times have led to many new questions and concerns regarding the impact of COVID-19 on real estate investing. We work with many women real estate investors that depend on their income to care for themselves and their family. Our goal is to provide reassurance.
The information provided here is simply our educated opinion based on research of the facts and figures available at this time. I am not relying on news outlets or social media to form my strategy or views.
Today’s Market Differs from the 2008 Recession
The emergence of this virus now means we are entering a recession. However, the market conditions are much different than during the 2008 recession. At that time, the market faced deep economic and financial issues which led to the recession. In contrast, this year the economy has thrived. Specifically, the real estate sector remained strong during this first quarter of 2020. Therefore, the massive asset repricing experienced in 2008 should not occur in today’s market.
The 2001 Recession Better Matches Current Conditions
In 2001, the terrorist attack of 9/11 pushed the country into a recession. Like today, external factors triggered the recession instead of economic factors. Real estate remained strong and real estate prices went up between 2001 and 2002 by 4.8%. Fluctuation in the GDP did not impact real estate prices.
Current predictions estimate the 2020 recession should only last two quarters. Many financial experts believe that once the pandemic is over the economy will recover quickly.
How the Coronavirus Effects the Real Estate Market
For the past few years in the real estate industry, sellers have dictated prices. In addition, property owners haven’t had the motivation to agree to a lower price. Instead, they’ve demanded high prices for their properties which has made it difficult for investors to negotiate a good price to make the deal profitable.
Considering current events, more property owners now seek to sell and liquidate for fast cash. This unexpected economic downturn meansmany people have lost their jobs or are at an imminent risk of losing their job.Many owners won’t be able to pay their mortgages. These factors combine to create fear and uncertainty for property owners.
Just in the last few days at REIW, we’ve received a surge in leads. Property owners are now willing to negotiate a more reasonable asking price.
As a woman real estate investor, now is the time to take your business to the next level.
Predictions for the Top Real Estate Investing Strategies
Wholesaling – With the supply of off-market properties suddenly increasing, sellers are motivated and more reasonable with price expectations. Step in as a wholesaler to help locate buyers through real estate wholesaling.
Fix and Flip – Historically low interest rates mean mortgage payments are currently lower than many monthly rental rates for homes in the “sweet spot” price range. This is the perfect opportunity to invest in a fix and flip. Rehabilitation of distressed properties can help meet the unexpected increase in demand at this price range.
Buy and Hold – Rental demand swells during recessions. People that can’t pay their mortgage end up selling and renting. Before the current recession, vacancy rates were already at an all-time low.
New construction over the last 10 years has not kept up with demand. This means the supply of both rentals and houses for sale are also historically low. Now is the time to use your knowledge as a real estate investor to help provide for that demand while also protecting your financial future.
Adjust Your Real Estate Investing Strategy to Match Current Events
We are dealing with a temporary crisis. Do not panic. If you understand the market, your real estate investing business will not only sustain but also grow.
Don’t let fear keep you from the current opportunities. With more property owners willing to sell and negotiate prices, consider how you can adjust your business to thrive.
We are also seeing less competition from new investors. Instead of launching their real estate investment business, they are waiting for the economy to settle. Smart investors know now is the time to seize the opportunity. In fact, in our experience, we’ve made more money during recessions than during strong market conditions.
Virtual Real Estate Solutions
As you know, we must practice social distancing at this time. However, that doesn’t have to limit your real estate investing business. Instead, create a virtual real estate investing business model.
Virtual real estate investment was already taking off. If you haven’t started using virtual real estate tools and techniques, now is certainly the time. With a lack of limitations on geographical areas or local demand, grow your business faster in less time.
Virtual real estate is the ultimate real estate investing business model. Plus, you aren’t as vulnerable to shifts in the market or the world when you have an online strategy that works.
In fact, you can continue to put properties under contract and sell them virtually. The key is to have the buyer add a contingency on the contract stating, “subject to visual inspection.” Once the crisis stops, you move forward with the contracts and closings in place.
Manage Your Real Estate Investing Business During the Coronavirus Pandemic
Stay calm and don’t panic. Prioritize your health and safety by practicing social distancing. But, also use this time to build up your real estate investing business.
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