Investing in real estate is one of the best physical investments on the planet. When you own property, you’ll have an income-generating asset that will support you during retirement. Once you pay off the mortgage, any rent you collect will be pure profit.
Granted, you’ll need to pay for maintenance, repairs, and property taxes. However, after handing those expenses, you’ll have plenty of money left over.
If you’re new to investing and you’re just getting started during the coronavirus pandemic, you’re going to face some unusual challenges. You’ll face some challenges that even experienced investors are bumping into for the first time.
While successful investing principles remain the same, here are four tips for getting over some of the investment hurdles created by the COVID-19 pandemic.
1. Hire a property management company
You’ll have plenty of expenses as a property owner, but nothing is more important than hiring a property management company. It’s not easy to manage a rental property on your own, let alone without experience.
If you’re new to investing in real estate, you’ve probably never been a landlord. Becoming a landlord for the first time can be stressful and time-consuming. The list of duties you’ll have is extensive. For example, landlords are required to take care of their tenants’ requests for repairs in a timely manner or face the potential of being sued.
Landlord duties are demanding, and there are harsh legal consequences for making a mistake. Your best chance at success is to hire a team of professional property managers. Property management teams handle landlord duties, including:
· Rent collection
· Evictions in accordance with current COVID-19 laws
· Lease creation
· Repairs, maintenance, and inspections
· Marketing vacancies
· Performing background and credit checks (tenant screening)
· Managing security deposits
Unless your dream is to be a landlord, you’ll have an easier time becoming profitable by having a property management company working for you.
2. Don’t pursue evictions without talking to a lawyer
Eviction laws have never been easy or simple. Tenants regularly win lawsuits against their landlords for illegal evictions. However, the COVID-19 pandemic has made evictions more complex. Don’t pursue any evictions without talking to an attorney.
Initially, the CARES Act created a nationwide eviction moratorium that expired on July 24, 2020. The moratorium made it illegal to evict non-paying tenants if their non-payment was due to hardship caused by the coronavirus pandemic.
This national moratorium has been extended a couple of times and is now set to expire on June 30, 2021. In addition to the national eviction ban, many states have been enacting and extending their own moratoriums and ordinances.
For example, Austin went to great lengths to help tenants on the brink of eviction by mandating a 60-day grace period to allow tenants to catch up on unpaid rent.
Despite the national eviction ban, many Houston landlords pursued evictions anyway. Although some of those evictions were likely legal, many were not.
It’s not easy to keep up with current laws, ordinances, and regulations without a lawyer’s help. Talk to a lawyer before giving tenants a notice to vacate or beginning the eviction process. Don’t risk getting sued in these chaotic times.
3. Buy property in an area that has sustained itself well
Invest in property in an area where people want to live. Avoid buying property in questionable areas. Pay attention to how current events may have changed certain cities that might have been good investments a few years ago, but are no longer considered good locations.
Throughout the course of the pandemic so far, some cities have proven to be dangerous and/or undesirable places to live. For example, when the autonomous zone known as “CHAZ/CHOP” was established in Seattle, Washington, many people were literally trapped in their homes, left to fend for themselves against violence.
In addition to nightly violence, vandalism, and looting, there were four shootings, two deaths, and several arson and sexual assault instances inside this zone.
Other cities, including New York City, Olympia, and Portland have seen violent protests, and many people don’t feel safe in these areas anymore.
4. Buy Rural property
Rural property has several benefits in the age of the coronavirus pandemic. Many people are moving out of the cities into the country, but rural areas tend to have less violence. You’re not likely to see violent protests in small country towns.
Expect a sharp learning curve
Property investments take time to turn a profit. In the meantime, expect a sharper-than-usual learning curve because of the coronavirus pandemic.