Currently the coronavirus pandemic is on top of everybody’s mind. Like you, we are all concerned and watching closely for what will happen next. Another thing on the top of many people’s minds is what will be the effects of the coronavirus on real estate investing?
The impact on real estate
It may be too soon to determine what the total coronavirus impact on real estate investors will be. This is a new and fast-moving issue and it’s very difficult to assess. That’s one reason why there’s so much uncertainty in the stock market.
But, and this is a big but, in the long run the economy is certain to rebound, especially in Florida. The fundamentals of the Central Florida economy and its future prospects are still very good and nothing has been reported in the news to cause us to think otherwise.
If you agree with that as an investor then you will view this pandemic as a short to mid-term market condition. So the logical thing to do is focus on protecting your finances and be ready to take advantage of any opportunities that you find.
Protecting your finances
The primary concern of an investor is that their business depends on buyers and renters earning salaries at their jobs. So when people aren’t able to go to work or get paid our ability to collect rent is affected.
Since most people don’t have much of a savings account, when they lose their income they will also lose their ability to pay their bills in just a matter of weeks, maybe months at the most.
Even though those shortfalls of cash might be short-lived, it could possibly lead to a recession. A recession is not a prediction, simply a possibility.
So how does a real estate investor protect their finances?
- Cash reserves - Do what you can to increase your cash on hand and reevaluate your cash backup plans such as your credit lines.
- Be proactive - Talk to your renters if they get in a cash pinch. Don’t evict them if there’s a reasonable chance that they will be able to catch up over time. There’s no point in evicting a good tenant just to have a vacancy that might cost you even more.
- Education and adaptability - Don’t be an ostrich, stay aware of the current crisis, and adapt the changes as they unfold.
Take advantage of opportunities
Whenever there is an unexpected economic shakeup there will be people who don’t have enough cash to get through it unscathed. That cash shortage can lead to buying opportunities for investors.
How to prepare for those opportunities:
- Arrange your financing - Touch base with your banking, private lenders, and other sources of credit. Ensure they are all ready to move quickly on an opportunity.
- Continue to search out deals - You never really know when a great opportunity will come along, so continue your lead generating activities.
- Submit conservative offers - Don’t be timid about submitting offers that are below the asking price. Make offers that are going to be profitable to you in the long run. Continue to follow up if your offer is rejected.
- Be patient - Keep an eye on the latest developments and be ready to act on opportunities when you find them.
Keep in mind that if this all blows over quickly you won’t be any worse off, but if an opportunity presents itself you'll be ready for it!
Are you ready to begin the search for your next investment property? Call us at EP Realtors® and ask to speak with one of our Realtors® who specializes in investment and vacation home properties, (407) 704-8030.
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