Are you planning to invest during this pandemic situation? If yes, then you need to assess the short and long-term pros and cons. If you are a rental property investor, then it’s true for you. With COVID-19, 2020 is already a challenging year, economy-wise. It holds a potential challenge for real estate investors as well.
This is why real estate investors are opting for training and workshops from experts like Phill Grove to find better ways to cope with the situation. To know who is Phill Grove, you can click here.
The prominent trends to consider
- Higher demand concentration
The US economy is undergoing a gradual change! However, the influx of new jobs is creating a demand for new houses. And this will keep on happening for a few years. Usually, IT assistance, office space management, and personal support function effectively when it gets concentrated. Hence, the business might cluster up in the market where the services usually exist, which also focuses on the services more.
- Reduction of home costs
It, however, doesn’t indicate that the cost can keep on increasing. Even though the housing demands in the vast markets are intense, the expenses of single-family houses are gradually growing in specific sections in the US and other parts of the world. It usually is the case when the house cost outruns the local incomes temporarily. And they need to pause at some point so that the income can catch up. In 2019, the average home cost in the US increased by 5%. In 2020, the experts are expecting a 3% increase.
And that indicates various things for multiple investors. Just in case you are planning to cash out a property and get even in the market, it is the correct time. And if you thought it’s smart to invest during the market boom phase, know that you’ll be investing during the peak time. Do you want a secure investment when the market is booming? If yes, you should choose an apartment in place of single-family houses.
- A huge gap between renting and owning
There’s been an increase in the home costs recently in significant markets. The ratio of the expenses to rents mostly has been high in various US and other markets. Are you a rental property investor? If yes, then it’s good news for you. However, it also indicates that it might become complex to simply purchase a single-family house and then rent out the same. Very few people can manage to pay this rent. A smart strategy here is splitting a single-family home into many rental units. It might take ample time and a little more money, but the idea is fruitful. The rents will keep on increasing, even if the home costs stagnate or stay decrease.
In conclusion, it is expected that the real estate investors might want to steer clear from credit risks that occur at the lower extreme of the investment cost range. No one can consider the increasing costs to flesh out the estimated return. Hence, the best solution is the strike a hard bargain. However, the ratio of the expenses to rents will be in the investors’ favor. That means an investment will not hurt you, and there will be less competition as well. It is essential to consider these trends before you make any real estate investments in 2020.
