HOW CRISIS CAUSED BY CORONAVIRUS OFFERS SMART OPPORTUNITIES TO INVEST IN THE REAL ESTATE INDUSTRY
The global pandemic, coronavirus has caused massive disruptions to livelihood, economies, and businesses worldwide. Leaving no nation spared in its path. As expected this scourge has a huge impact on the real estate sector just like every other business. Investing in a time like this require having an investment- savvy outlook.
Before we go into details on how to successfully invest during this period of global crisis lets speak briefly about coronavirus.
Coronavirus also known as COVID- 19 is an infectious disease that is infecting people globally. Most people infected by this virus experience mild respiratory illness which can sometimes be recoverable from without any special treatment. Older people on the other hand or people with an underlying illness like diabetes, cancer and asthmatic patients are more likely to develop seriousness illness which can be life-threatening.
Pandemic threats such as COVID-19 have disruptive impacts on economies globally with stock prices and bond yields plunging; major institutions worldwide have cut their forecasts for economies.
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To contain the virus from spreading many countries have suspended business operations and locked down to restrict movements of millions, a move which will slow down the world’s economy and drag down global operations along the way. To make things worse, the virus is spreading rapidly around the world. Whether this global crisis lasts or not, the impact on economies and businesses will be tremendous. The coronavirus pandemic has created an economic slowdown worldwide, and this can actually be seen as an opportunity to invest in real estate since this investment speaks to a variety of investor’s needs.
Investing during a crisis is no doubt risky because of the timeline and recovery is uncertain, but still, people without fear of taking a risk may reap big returns during an economic recovery. While most business is in crisis during a period like this, smart investors in real estate will be able to buy valuable real assets below the normal price and as a result, they will be able to enjoy handsome reward when the storm clears and real estate market price will become stabilized.
Investing in real estate during this crisis is a smart move and can be rewarding for patient investors who are smart and disciplined enough to invest.
HERE ARE SOME WAYS INVESTING DURING THIS CORONAVIRUS OFFERS SMART OPPORTUNITIES TO REAL ESTATE.
Still not into the idea of investing in real estate? Here is a look at the advantage of investing in real estate property when the stock market moves into a sluggish cycle:
- RECESSION PRESENTS OPPORTUNITY
Opportunities can present themselves for whoever is prepared, a time of crisis can be the best time to begin investing in real estate because assets prices will have fallen hard, and properties can be obtained at a lesser price compared to a few years earlier. You can step in to obtain properties and assets up for a fraction of their value as other investors might be forced to dump them.
- ASSET PRICING REVALUATION
You can spot a property that has been languishing on the market for some time especially in a depressed market. The seller might be willing to sell on a reduced price, some of the low-priced property may require repair that is why it is important to evaluate the property focusing on the quality and return potential involved
- REAL ESTATE MAY BE LESS SENSITIVE TO VOLATILITY
Market volatility can add to investor’s recession woes if stock prices are moving on a wide swing, which can directly affect the return profile of a portfolio. Real estate has a low correlation to stock market movement and can be more reliable during a time of crisis.
Because of the steady nature of the real estate business, it has a good hedge against volatility even in times of recession because people will always need a place to stay, work and get services. So the market will always exist.
Also Read: Real Estate is a good Investment
- REAL ESTATE PROPERTY CAN PRODUCE STABLE INCOME
One of the reasons to consider real estate investments is the opportunity to generate income. Real estate investment can provide direct ownership which allows investors to keep the rental income.
Real estate tends to offer predictability in a time of crisis because of the consistency the investment offers in a time of recession. Consistent rent from tenants does not fluctuate during this periods, their monthly rent payment is always due and is never tied to the stock market.
- REAL ESTATE TENDS TO HAVE A BETTER HEDGE FOR INFLATION THAN BONDS
Real estate investors also have a hedge against inflation and fluctuating interest rates when they have control over rental prices. A recession can open opportunities to invest. Investing in terms of managing the balance between supply and demand, when supply is high and demand is low properties can be purchased at a deep discount.
As an investor, you can position properties as rentals until there is a need to shift back due to low supply and high demands and at this point, the property can be sold for a high profit. Raising the rent, for instance, allows investors to keep up with inflation. In that respect, it offers flexibility to stocks and bonds. That is why when evaluating properties it is good to focus on the quality and return potential involved.
INVESTING DURING A CRISIS
- Prime assets are placed on sales at ridiculous prices during a crisis. This allows an investor to cash in on to secure an asset that can be converted to cash or placed in an investment portfolio.
- Sellers are more liable to sell properties they wouldn’t have wanted to sell during a crisis and so many people will decide to acquire real estate during a time of crisis. Smart investors should regard the time of crisis as the most convenient time to begin the process of the investment cycle.
- Invest based on objectives when choosing your investments, if you can afford a little big risk.
As a smart investor, the best time to buy is when everyone else is selling, do so wisely with all details checked out. To be a successful investor you need knowledge and the right trading platform.