A lot of industries have been crippled by the pandemic. For instance, tourism has gone down sharply due to government-imposed travel restrictions, and this causes airways to suffer a similar fate. These disheartening facts scare people from pursuing investments because they are now more risk-averse.
However, there is a brighter side for businesses and corporations amidst the pandemic. Courier companies and meal-prep delivery services are thriving right now since people avail of these more frequently. Financial technology companies are also faring well because most transactions are now done cashless.
Another industry that has a high potential to boom despite the pandemic is real estate. Housing is a primary human need, and it will always be in demand regardless of the situation. That is why it would be prudent to put your investments in real estate properties.
Though, the problem is that people are not very familiar with real estate investments and are pestered with questions. Do you really need to buy a house? How much do you need to invest?
Don’t worry. This article will teach you how to be a smart investor in real estate, even amid COVID-19:
Assess Your Financial Situation
Before you start your investment journey, you should be aware of where you stand financially. Check your assets and your net worth. Can you afford to let go of money for a prolonged period of time? These considerations will help you in deciding which type of real estate investment is best for you.
If you have enough capital money, the investment method you can go for is constructing a property from the ground up or buying an already existing one. You can then lease or sell it. Doing this requires a high amount of work and an even higher amount of money. However, this is also very profitable.
Meanwhile, you may not have the necessary capital for building or buying your own property. It’s alright because you still have options that will work for you. A real estate investment trust (REIT) is a financial vehicle available to a wider range of investors. Through these, you can invest your money and get dividends in a way that is similar to how stocks work.
There are indeed many avenues for investing in real estate. And you can maximize your portfolio by looking at your capacity. Hence, you should always assess your financial standing before making an investment decision.
Research About the Hottest Properties in the Market
Let’s say you are one of those who have enough capital to build or buy your own properties. The next step, then, is to know which properties are worth investing in. This requires a lot of research and even some footwork. So, here are some tips for selecting the right investment for you:
- Focus on Long-Term Rental Properties. This is the type of real estate that is most profitable, especially now during COVID-19. Right now, a lot of people have lost their jobs, so the prospect of renting a house became more attractive as compared to owning one. If you are going to build a house, make sure that it is designed to accommodate renters. You also have to build it on land that is not so crowded and near the necessary establishments like stores and hospitals. People would want to live in an area with a lower population density because it decreases the chance of exposure to the virus.
- Avoid Short-Term Rentals. The pandemic has pushed a lot of people inside, so they rarely go out on sleep-overs or vacations. This situation has adversely affected the company Airbnb, which offers short-term rentals to tourists and vacationers. It is reported that some Airbnb hosts shifted to leasing their properties on a long-term basis to counter the effect of the pandemic. In any case, you should avoid investing in short-term rentals for now.
- Trying the Buy-And-Hold Strategy. You may want to invest in a property but don’t like the idea of renting it. That’s alright because the buy-and-hold strategy is also a reliable investment technique in real estate. You can take advantage of the relatively low mortgage rates right now to purchase a house and then keep it on hold until the prices are ripe for selling.
Look for Reliable REITs
Aside from directly investing in real estate properties, there are other options out there. This type suits more investors, but it is particularly advantageous to those without the financial capability to buy or construct a real estate property of their own.
As defined earlier, real estate investment trusts or REITs work similarly to stock investments. Essentially, investing in REITs means that you are putting your money in a real estate company that has a fund manager and a set of experienced professionals. This is what makes this investment strategy very attractive to investors.
Here are other benefits of investing in REITs:
- You can start small and work your way towards bigger investments.
- REIT assets have high liquidity, which means that it is easy to convert your investments to cash.
- You will be given an option to invest in a “basket” of real estate properties, leading to a more diversified portfolio.
However, despite these advantages, REITs also have their fair share of cons. Because it is relatively low-risk, the returns you get in REIT investments are also small. Add to that; the dividends are taxed as income, leading to an even smaller return.
Consult With Experts
Regardless of how much research you put into finding the best property, it is still best to consult with experts. Especially in COVID-19, many properties are experiencing different challenges, and their value may be plummeting. A real estate agent is experienced and professional, which will guide you to find the best possible property that fits your needs, location, and budget.
Aside from this, an expert can also help you break down expenses considering things such as tax and mortgages. At this time, it is better to stay in the comfort of your own home as opposed to checking out the property by yourself. Your agent will make all the calls and paperwork necessary to give you options from the comfort of your own home.
Investing is more of a long-term deal in general. You can’t go into the world of investing thinking you’ll earn overnight or maybe even after a few months. You have to understand that not everyone is on the lookout for a property but especially during the COVID-19 pandemic. It is a situation, unlike any other, and it’s hard to completely predict how this will end up affecting real estate and businesses in general.
We’ve seen some companies get bankrupt, which is why a lot have been hesitant to invest. The right mindset to have is to think ahead. This pandemic will not last forever. Now is the right time to invest if you have the means. This is because prices and demand are at an all-time low. Home loan interest rates are the lowest they’re ever been, and you can get properties at a reasonable price.
Real estate is considered a stable asset with positive traction, and if you have plans to buy in ex-pat areas like the city, it is said to have faster recovery time in those areas. It’s almost a guarantee that prices will go up once all of this is over, but the biggest question is when will it be?. Don’t let this pandemic ruin your mindset that you are making a significant investment. Just remember to think long-term as short-term risk-takers have the most to lose.
Timing Your Buy
Patience is key when trying to invest. It is best to look at all the options possible and not to purchase property too quickly. You should evaluate everything, such as location, value, and payment. Your goal is to invest in a property that you think will grow in the future.
With COVID19, businesses and real estate properties are struggling, which increases the chance that their value will go back to normal in the future. With this in mind, you must stay aware of the possible risks that could arise. Now is the right time to invest in properties, but you will still have to time your buy-in, which you will be enriched with perks throughout the way. Timing the market is known as an investing strategy in which you try to estimate price fluctuations. Investors will try to guess when the market will go up and down then they’ll make the corresponding investments to try and turn that market into a profit.
You may feel like you know a lot about investing, but it doesn’t hurt to do your research online. This is where you can find the best properties available on the market in which you can filter to your needs. This can also be where you find a good broker and attorney that you can read up on. This will be crucial as they will be with you every step of the way, so it’s critical to hire someone professional with a well-known reputation.
Another thing to research is possible payment methods that can benefit you in some way. Some properties have options for installments, while others have the advantages of a long-term lease. With COVID-19, it’s tough to leave the house. Make sure to get all the necessary information you need online instead of taking the risk of going outside.
At this point, a few months after the pandemic, financial costs have drastically dropped while house prices have remained steady. Given all that was mentioned, now seems like the ideal time for investment, but one must do the right amount of research before thinking of placing down money.
Invest Smarter This COVID-19
Buying a property takes a lot of time and effort, handling different types of paperwork and schemes. You have to make sure that you’re actually making an investment, or you’ll just be wasting your time with the process and all the things that come with it. Patience is crucial, and it’s essential to understand that it may take years before you eventually make a profit.
Especially with the time right now, it is very hard to tell when things will go back to normal. You must assess your financial security first, or you’ll be stuck in debt for a long time. If you feel you have enough to invest, now is perfect after taking the necessary precautions.
A famous investor named Puri once said that investment would undoubtedly create steady rental income but are we satisfied with that? We should not settle for anything less than a bargain when we invest because it takes a lot of time and effort—the aspect of investing needs to be thoroughly researched before making a purchase.