The financial implication of the COVID-19 pandemic has been severe, and numerous private renters will really feel the effects thereof.
While this will have a significant impact on how people will be able to afford their housing, it isn’t all doom and gloom for the housing market, and it’s not a bad idea to think about real estate investment as a long-term solution to receiving a passive income, of full income, which will also increase your personal wealth.
How has the pandemic affected homeowners vs. tenants?
With unemployment reigning, there is very little doubt that more and more people who rent privately will find themselves unable to afford their rent, whether in whole or in part.
Even though landlords may be more confident of being able to afford their monthly mortgage payments at the moment, tenants have less faith. With unemployment as it is, and many families not having sufficient savings, tenants are not confident that they will be able to pay in the coming months. This will no doubt have a knock-on effect on landlords.
Should tenants not be able to pay their rent in the coming months, landlords may see themselves struggling as a result.
Will people still buy homes?
Even though inner city areas may still struggle, the suburbs and rural areas are actually faring pretty well. According to the National Association of Realtors, home sales in the United States of America have actually increased 24.7%.
As of yet, there isn’t any evidence that this will stop even though areas in the Northeast seem to be struggling a bit more. This could be due to cities such as Boston and New York.
However, the country areas are doing just fine. This may be because most people still want homes that are more attractive to them, and they’d prefer isolated locations. Currently, as well, mortgage rates aren’t that high so purchasing a property isn’t as expensive.
Luckily for American buyers, international home buyers aren’t investing in the U.S. at present and it isn’t expected to get much better. However, even though it’s good for local buyers, sellers may find this troublesome as international buyers tend to increase home prices.
What will happen with rental properties?
Even though the tourism and vacation industry was one of the most hard-hit ones when the pandemic started, this trend hasn’t continued as we might have expected. Many people still want to feel like they are on holiday, but also staying safe. So, if you have a holiday home available to rent you might not struggle that much to find someone to stay for a couple of weeks, or even permanently as more people work from home.
Space has become a commodity, and if you have it, you have the chance to make some money with it.
How to become involved in real estate investment
This real estate investment type means purchasing a property at a reduced price with the plan of renovating it and renting it out to tenants as a supplemental income. If the interest is to become a real estate business then it’s a good idea to form a limited liability company (LLC). This business formation is very easy to begin and it’s not difficult to maintain.
Forming an LLC can be accomplished in five simple steps and doesn’t cost a lot. There are, of course, also professional services which deal with it on your behalf. This comes at a price, although not one as steep as many might assume. The business structure also offers personal asset protection and improved credibility with potential clients and banks.
Even though the pandemic is still permeating every aspect of our daily lives, and will do for some time to come, the real estate industry still has a great deal of potential. Even though there is a great deal of turmoil in people’s lives, both professionally and personally, there is still a lot to look forward to in real estate investment. Property investments remain a good source of passive income, and that doesn’t seem to have changed. As the past year has emphasized, it is important to think about long-term investments as an important element of safeguarding financial stability.