As the COVID-19 pandemic persists, investors are increasingly seeking safe havens for their money. One of the leading options is real estate, a historically stable market that produces strong long-term returns on investment. Here’s what investors need to know about the opportunities and risks of investing in real estate during the COVID-19 pandemic.
How COVID-19 Could Open up New Real Estate Opportunities
For investors currently holding liquid cash and who have the credit to access financing, the pandemic could actually open up some fairly strong real estate investment opportunities. With consumers less confident in buying housing than at any time since the subprime mortgage collapse of 2008, real estate investors have the opportunity to buy discounted property from motivated sellers facing a fundamental lack of liquidity in the market. Consumer bearishness around buying homes will also translate into a steady supply of renters, giving investors a good chance to make money from rents after the pandemic.
The Risks of Real Estate During COVID-19
Although there is likely a promising set of opportunities emerging in real estate, it’s important to keep in mind that the current situation also carries its own risks. Skyrocketing unemployment has made it difficult for tenants to pay their rents, translating into difficulties for landlords who still have mortgages to service. Fortunately, government stimulus programs and bank forbearance policies have reduced these risks somewhat, but it’s still important to take them into account before investing.
Is Now a Good Time to Invest in Real Estate?
For investors who don’t mind a bit of risk and are comfortable waiting to see returns on their investments, the COVID-19 pandemic may be a good time to invest in properties. Owing to its nature as a physical asset, real estate is safer and more historically stable than the stock market. Given the likelihood that the global economy is entering an extended period of uncertainty and negative or anemic growth, real estate may be a suitable addition to an investment portfolio.
While real estate won’t be a good fit for every investor, the opportunities emerging in the property market as a result of COVID-19 make it an appealing option for both risk mitigation and long-term growth. Barring an unexpectedly quick economic recovery, real estate is likely one of the safer asset classes investors can access at the moment.