The 2020 COVID-19 pandemic has affected almost every industry worldwide. In the United States, the outbreak has caused millions of Americans to lose their jobs, at a greater rate than the last recession.
The economic consequences of the pandemic are expected to remain for quite some time as the world is foreseen to sink into a deep recession. Even after lockdown restrictions are lifted, consumer confidence is predicted to pick up only after they are convinced that the threat of COVID-19 has been contained.
Businesses and individuals are left with increasing uncertainty, with the development of a vaccine predicted to take up between 12 to 18 months at best.
Moreover, having a job is no longer a guarantee of financial security. In a survey conducted by The Harris Poll last April 2020, 60% of US adults have reported being concerned about losing their job as a result of the coronavirus outbreak. In addition, Reuters reports that 26.5 million Americans have filed for unemployment benefits between March 21 to late April.
Given these numbers, what other income-generating options could there be at this time? Cody Sperber, a seasoned real estate investor and co-founder of online business school 100 Million Academy, says prospects are relatively bright for real estate.
“Real estate has always been a stable investment option, and an economic downturn could actually offer many opportunities for buying,” says Sperber. “Having said that–I guarantee that most real estate investors do not wish to take advantage of the difficulties faced by property owners at this time. In fact, investing is key to preventing a market collapse and protecting the economy.”
Sperber cautions prospective investors will have to be patient, should they choose to buy properties this year. “We’re only about two months into the pandemic, so I strongly suggest you observe the market and wait for better deals. We can’t say for sure when this will happen, but at the moment, you have property owners in the hospitality, tourism, and F&B sectors who are facing tight cash flows, and might be selling down the road,” he shares. “We’re also expecting retail office space prices to depreciate because more companies have switched to long-term work-from-home arrangements.”
He also advises investors to purchase properties for cash flow. “A common mistake of rookie investors is relying on the property’s appreciation to earn money. Don’t set yourself up for failure; find a way for your investments to pay you now,” advises Sperber. “If you are concerned about tenants defaulting on payments due to the crisis, it’s a good idea to put your money in areas where the economy is expected to recover more quickly.”
Sperber assures investors that while they may be facing a long road ahead, they will be getting their returns down the line. “The real estate market may be slow, but it is also very resilient. Past economic recessions will show you that the market will always bounce back.”
