Real Estate Investment during a Pandemic [PART 2]
In the previous part of this 3-post series, we touched how the real estate scene is responding to the pandemic. If you didn’t read it, please go here and read: Real Estate Investment during a Pandemic [PART 1]
One of the biggest aspects to look out for is how this pandemic will bring about behavioral adjustments. Owing to this, a lot could change in the real estate market, leading to a permanent reduction in the valuation of certain kinds of properties.
For instance, people are enjoying their new-found convenience of working for home. Could this culture sustain after this pandemic is done? This is going to sway where the office estate moves in the future and will it remain just as much in demand as in pre-COVID-19. Similarly, once the pandemic mutes, will people gain the confidence to visit retail spots? Will the commercial estates like hotels and malls match the demand level that they had before the pandemic started? These questions – and individuals’ behavioral adjustments – are quite relevant particularly when assessing the short and medium-term trajectory of the industry.
After all, we’ve seen how so many Americans shift from the idea of owning a home to preferring to rent. This has fundamentally transitioned the approach investors now take in dealing with residential properties. Could this pandemic bring about similar shifts that could be fundamental in nature? In the coming months, the answer would get much clearer.
For now, people should consider all these variables when opting for commercial and residential real estate investing – instead of chasing the properties because the listed price is too appealing. Can that property bring you desired returns in the long-run? Can it bring you sufficient cash flow in the short and medium-term? Could you have invested the same sum in other types of properties – in a different location – that would have unlocked you a greater profit margin and better future valuation?
Certainly, keeping in view how the trends have rolled in the past, the long-term investors who believe in holding assets inevitably end up with good returns. But those who are looking for optimum returns and consistent (and high) cash flow, there’s a lot for them to consider in the coming months when making their commercial and residential property investment decisions.
There are opportunities in abundance. But it’s not easy – or possible for all – to leverage on these opportunities. There an equal amount of room to end with a bad deal that puts your portfolio in beating in the net. So, if you’re a real estate investor, take steps forward cautiously. The prices of properties are going down. But to build a high-value portfolio, there’s much more to it than just buying underpriced assets. You will have to factor in a host of variables, which, admittedly, isn’t easy. So, take your time and sharpen your acumen all the while when making any investment decisions. But at the same time, do not take too much of time. As mentioned, there are many opportunities right now. They might not stay here for long.
Read the next part of this 3-post series: Real Estate Investment during a Pandemic [PART 3]