Currently, the US housing market is white hot. Mortgage rates are at a record low, and buyers are swapping cities for suburban life. Malls, offices, and other real estate properties associated with trade have been hit hard by the novel coronavirus COVID-19 pandemic.
The availability of video conferencing and online chat services has made it easier for people to work remotely, with minimal change in productivity levels. And while digital retailers are flourishing, brick-and-mortar establishments are taking serious strain.
Global economists predict that this trend will continue for some time still. Commercial real estate will continue to decline in popularity as an increasing number of people work from home and shop online. It’s estimated that roughly 56% of the American workforce has a job that’s at least partially compatible with working remotely, so we may well be looking at the new normal.
Certain Commercial Real Estate Sections Staying Stable
The stasis in low commercial real estate value is not true across the board, however. Some subsectors are managing to survive and even thrive in the current climate. Warehouses that cater to eCommerce companies, for example, are well insulated from the economic crisis, as are self-storage businesses. In fact, the latter group will probably register a CAGR of 134.79% during the 2020 – 2024 period.
Certain vendors are blooming, with grocery stores, pharmacies, and restaurants that provide delivery and takeout options enjoying a boost in custom. As things settle, in terms of getting the pandemic under control, it seems that people are anxious to get out and about again.
How to Take Advantage of the Situation
If you’re wondering how to frame your property investments going forward, consider the buy-to-let option. It’s one of the best for financiers, as you’ll be able to generate a monthly income from the properties in your portfolio.
House sales percentages surged in June 2020 by a massive 20.7% while mortgage rates hovered at record lows. This creates a perfect storm, and the ideal buyer’s market. While there are risks to this venture, with careful planning you could soon see a steady source of passive income over the longer term.
With bonded property, you’ll initially use the earnings you receive from rental to pay off the mortgage. Wherever possible, expenses like maintenance, rates and taxes, and landlord insurance premiums must be covered by rental too. If your investment is a savvy one, when your mortgage is paid up you’ll be left with a property that generates a second revenue stream.
Purchasing houses and then flipping them to boost their resale value is another shrewd plan of action for investors. Investing in a cheap property now and renovating it for resale when the economy stabilizes could see a hefty ROI.
The pandemic has created the perfect opportunity for investors with solid financial backing looking to profit. Low mortgage rates, and lower house and commercial property prices are driving the closure of deals that may not have been possible previously.