Global Pandemic & Real Estate

Real estate has been regarded as one of the safest investments for quite some time. Despite the relative safety of real estate investments; however, there remains the possibility that the real estate market can fall like any other investment. The current global pandemic makes the whole situation worst.

Over the long term, real estate still remains relatively safe simply due to the fact that the population of the world continues to increase while land is a limited resource. This is an ongoing issue for the past decades in countries like Hong Kong and Singapore. When there is an occasional downturn in the real estate market, it is important to recognize certain strategies which can be used in order to keep a real estate investment from becoming a complete loss.

The first thought many people have when they realize the market has experienced a downtown is to attempt to sell the property as quickly as possible before the market grows worse. In reality, many investors have found that it is often better if they can manage to hold onto the property and ride out the downtown in the market.

While the market might certainly dip lower before it rebounds, historically it always does come back. What we experiencing now during the outbreak, though people are not buying, but we could see the demand for rental property increases. People tend to postpone the idea of owning a property due to job security and many uncertainties in the global economy.

By selling the property during a down market, you position yourself to take a certain loss. If you are able to keep the property afloat you stand a much better position of being able to make a profit on it when the market turns back around. Of course, holding onto a property during a down market sounds fine in theory but it can often be much more difficult in practice.

One possibility is to rent out at lower rate of the property in order to attain a positive cash flow while you wait for the market to turn around. Those that rely on tourism such as Airbnb hosts would need to think how to bridge the gap until the pandemic is over. This is something that we are witnessing these days with the surge of supply in rental market. The good thing for Airbnb hosts is that their units is ready to convert for long-term rental. It is just as simple as flicking the fail safe button. This could be the way out. However, one should consider that once the unit is being rented for long-term meaning that the property is locked for the duration of tenancy.

See also - What is Due Diligence in Real Estate

In addition, it is important to make sure that all of your account is correct. Many investors find they are not taking full advantage of all the tax benefits offered to them. Consulting a professional tax advisor in order to locate legitimate tax advantages you may have missed could certainly be well worth it financially. This is especially true if you have a mortgage on your property. You may well find that the write-offs that are available to you could provide the assistance you need to hold onto the property until the market swings back around.

If you find that you are facing a foreclosure on the property, then the best option would obviously be to go ahead and sell it in order to attain as much profit as possible rather than take a complete loss. In this type of drastic situation, the key is to look for ways that you can make the property as valuable as possible. Selling real estate is really not much different than selling any other type of product. In this case, the product is a home or building. If you have had the property on the market for awhile, it is important to look at why it has proven difficult to sell the property. You might consider making some changes in order to make it more desirable.

Ultimately, holding out during a market downtown with global pandemic involves remaining calm and avoiding acting on emotional impulses. Making hasty decisions based on fear will often cause you to take an action you would likely regret once the market turns back around. Before you take any action, make sure you have carefully considered all of the options available to you. By doing so, you may well be able to turn a dip in the market into a big return once the market starts the climb back to the top.