America may have never seen protests, riots, and looting on this scale and this widespread. How is it adding more fuel to recent shifts in real estate for investors?
The Perfect Storm?
Some opportunistic investors may have been disappointed that COVID-19 hadn’t yet cratered the property market and brought 2008 prices and acquisition terms back. Well, now we have nationwide riots and civil unrest in just about every major city. The icing on the cake is that we are moving into hurricane and wildfire season, a natural disaster season which is expected to be even more active than usual.
Even without any other recessionary data, this could be the perfect storm for many property owners, insurers, and lenders.
Escape The City
COVID-19 kicked off a big movement in workers and executives moving outwards. This was already happening under the surface as more and more companies were going virtual and jobs were too. The pandemic just amplified it and added more urgency.
Looting and civil unrest have picked up where the pandemic left off. It has brought higher risk and costs of ownership in the biggest metros, as well as higher living costs.
When companies like Walmart shut down their urban stores due to hazards, you know it is serious. For organizations and workers, being further from the center just seems to bring more peace of mind, health, safety, and of course affordability too.
This may change once urban prices come down and local jobs bounce back, but many may not return.
Buy & Hold Income Investing
As short term demand shifts outwards to the burbs and beyond, where we may also see some of the most growth in amazon warehouses, jobs, etc., these locations may also deliver the most consistent passive income, and returns.
There will be plenty of rebuilding and rescue opportunities coming up quickly. In addition to residential homes, we’ll likely see defaulting CRE loans and tenant vacancies across office, retail, and new condo developments. It’s all about the price, and what you can do with it. Prime locations have shown to be strongest for protecting wealth over the long run. Yet, some may require permanent repositioning. For example, condos to rentals, office and retail to warehouse, storage, and apartments.
Whichever approach you are using now, it is also important to stay on top of what is most important to tenants. In both commercial and residential real estate, we can expect their top priorities to include security, health, and sustainability.
How are you working to be a part of the solution, and investing to protect and multiply your capital?