Thinking Like an Investor in a Pandemic

If you’re like me, you’re probably looking around the world right now and feeling pretty uncertain. Things feel shaky and scary and some of us have lost jobs or housing during this pandemic/recession.

The economy can feel like a fragile thing that we are all tied to.

But let’s think back to the last big economic meltdown in our life time – the 2008 recession. This was another scary, uncertain time for real estate investors. Renters whose jobs were effected by the recession struggled to pay rent, and landlords who depended on rent to pay mortgages struggled to meet their obligation to the bank.

But do you know what else happened?

Home prices fell by nearly 33%

The recession created a buyer’s market. And if you’ve been looking for an opportunity to buy a real estate investment property, the post-recession housing market was your chance.

A buyer’s market in real estate investing means prices are lower than average. If you think of it like a tug of war, a seller’s market is when sellers trying to offload a property to the market have more rope, and a buyer’s market is when those looking to buy a property have more ground.

In a buyer’s market, investors can buy homes that are higher value, meaning they are have higher rental value (ie closer to good schools or more recently updated remodel, etc)

Granted, there’s a lot of privilege that comes from being able to buy when most people are losing their shirts. You have to have maintained your income through a job market that was shedding jobs. Your partner or kids or parents must not have needed your financial support from their own economic hardships, and you must have been confident that you could find renters at a time when some people were struggling to pay rent.

That’s a lot of risk.

But do you know what else else happened after the 2008 recession?

Housing prices went up by over 50% since hitting the bottom.

That means that investors (and regular old home owners) who bought housing post-recession were in for huge returns.

And I get it. You need to be able to stomach the risk and feel comfortable with your decision even when it feels like the bottom is falling out. But if we’ve learned anything from the 2008 recession, the pandemic/recession might be the opportunity you needed to buy a rental property at a discounted rate. What are your thoughts on taking a risk like this?

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