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Adam Veron: Real estate buying in an economic downturn caused by COVID-19

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(Gloucestercitynews.net)(August 3, 2020)--People have become more familiar with their homes as a result of the full or partial lockdowns being implemented across the nation. Moreover, there is much controversy concerning the fate of the realty market. Most of the markets have succumbed to the effects of the outbreak; however, the property sector has shown resilience. In April, the average house price experienced an 8% annual growth, which can seem attractive to investors. In fact, even sentiments find this statistic favorable. Approximately 35% of Americans picked real estate as the top focus in terms of investments, which were followed by stocks and bonds, savings and then gold. Only about 16% of the people expressed interest in gold.

The pandemic has greatly affected construction projects, thereby creating a supply and demand gap. Due to this fact, both individuals and industries are feeling unsure of the future. Despite all of this, consider putting money into buying a home. One of the reasons behind this is simply applying lessons learned from past experiences. During the period of great recessions, real estate has either been resilient or has received devastating blows in a few of the sub-sectors. Right now, all the restrictions have not been completely eliminated, so waiting for states and cities to open for property visits may be a necessity. However, the fact is, low-interest rates and reduced borrowing costs, along with sufficient finances, can prove to be advantageous. 

Here are some areas for which you can consider as it relates to investment purposes. Let’s quickly explore them.

Places to invest your money in real estate by Adam Veron

 

Commercial Real Estate (CRE)

Commercial real estate includes hotels and retail stores, which makes it one of the riskiest investment areas. Currently, this market is 28% down, with hotels and retail spaces experiencing 48% and 40% slumps. Recovery is a possibility, but it will be gradual or rather U-shaped instead of a sharp V-shaped rise, due to phase-wise openings. However, there are alternative opportunities if patience can be exercised while waiting for results. The low-interest rates, robust economic fundamentals, and high-quality properties are some of the alternative possibilities. The leading entrepreneur, Adam Veron strongly suggests to diversify your portfolio.

 

Buy-to-let property

If you are looking for passive income through rents, price appreciation, and capital growth, Buy-to-let property can be the right choice. It is also an excellent opportunity for those who consider being novice buyers. These opportunities have the potential to be a reality in this current environment. However, landlords still have to be cautionary as some people may not be able to pay rent. For a more secure investment, consider focusing on pockets where the labor market is comparatively better. Nevertheless, keep in mind that you may face the same amount of logistical challenges here as with houses.

 

Before you plan to invest in any of these sub-sectors of real estate, you need to keep a few things in mind. For instance, it is a good idea to allocate at least three months of salary as cash to deal with any uncertainty. As far as the pandemic-led slowdown is concerned, it is necessary to have a minimum of six months' savings with you. The emergency fund can help you cover or meet sudden expenses. At the same time, you can rest assured that you have a hedge to protect you from any financial distress. 

image courtesy of unsplash.com

 

 

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