During the era of COVID-19, between lockdowns, and economic shifts, everyone around me is asking whether or not I am still into investing in real estate. My answer is a resounding “YES”. I have so many reasons for my continued interest, but here are my top 5.
1. Staying off the wall street, stock market roller coaster. Financial analysts say that, over time, the stock market can perform. But, it still can be a drama filled experience, of which you have zero control. It's no doubt that real estate investing AND Wallstreet investing gets impacted in an economic shift. However, I personally sleep better at night knowing that my hard-earned money is invested in real, hard assets, like real estate.
2. Passive income. I love, love, love creating passive income streams. Also known as “mailbox money”, passive income is the check that appears in your mailbox (or bank account) each month when your tenant pays rent. Those checks pay the mortgage, the bills and provide cash, with no effort on your part.
I’m not going to lie - people out there are suffering for sure. The economic shut down has impacted many of my tenants in both my single-family homes and apartments. The government has helped by providing unemployment boosts and stimulus packages, but these uncertain times are bound to continue.
However, in all market cycles, the fundamentals remain. I’ll say that again,
3. The fundamentals remain the same. Regardless the market, you need to follow the winning fundamentals:
Buy right – buy for cash flow, where you net profit from rent, after paying all the expenses. Buy in neighborhoods where people want to live. Buy stable assets and add value to force appreciation.
Property management – hire professional property managers who’s daily job is to manage tenants and properties. If you insist on managing your own properties, be sure to include property management fees in your deal analysis numbers.
Team – surround yourself with the very best team of brokers, lenders, operators, property managers, underwriters, etc.
4. Humans need to live somewhere. Everyone needs a place to live. We buy class B, workforce housing and in times of economic distress sometimes folks in otherwise class A areas, need to move, they often go to B areas.
5. Opportunity. I think we’ve all heard, the Chinese proverbs, “crisis brings opportunity and change”, as well as “life can never give security, it can only promise opportunity”. Maybe this seems cliché or trite, but nonetheless, it’s so true. There are major aspects of real estate investing that will struggle, like commercial retail and office buildings, but that’s why we focus on providing clean, safe housing.
6. Taxes. Covid or no covid, the government still loves real estate investors and rewards with them the tax codes.
I jumped into investing in real estate in the 2008 recession. I was a newly single mom, with heaps of fear and uncertainty. But, I am so glad I did. Real estate investing has been a huge blessing for my family, and if I hadn’t stepped out in fear during what was an extremely scary time, I would never be where I am today. If I can do this, you can too.
Overcome your fear with knowledge. If you are interested in investing in real estate, do your homework and learn. Feel free to reach out, I always love to talk real estate. The key to this learning is don’t stop there, don’t let your learning turn into analysis paralysis, you still need to take action to actually go anywhere.