We may already be in the greatest economic depression America has experienced in its history. Yet, for some, it will be the defining momen when they create the greatest wealth and income in their lifetimes.
How might this period benefit apartment building investors?
The Greatest Depression?
Whether or not this is a true depression will depend on how long it takes the economy to recover from the COVID-19 pandemic in 2020.
However, regardless of how long lock down periods and quarantines last, few believe the economy will bounce back to its previous glory very quickly. Fortunately, with 2008 not far in the rearview mirror, governments, corporations and investors are technically far better equipped and understand what they need to do to survive and thrive again. In reality, it will all depend on the execution of that.
Still, there will be a significant road to recovery for many industries, and ways of doing business will be completely changed forever. It will take time for people to adjust to this.
In perspective, the statistics we’ll see in the months ahead will likely rival if not dwarf those of the Great Depression of the early 1930s.
During the Great Depression, GDP dropped by 15%. Analysts are already saying GDP is heading down by double that in some countries. In the Great Depression, unemployment soared to 50%. In 2008, it took months and years for markets to bottom out. Yet, we saw a steeper dive in 2020 in just a matter of days. Unemployment stats have floated in the 10% to 23% range. True unemployment could already easily be double that, and it is likely to keep rising for the foreseeable future.
Storm Clouds & Rainbows
COVID-19 has caused immense tragedy. There is no question of that. There will be long-term side effects for years. This shouldn’t be minimized.
Many will be hit with additional health and natural disaster crises in the months to come on top of this.
Yet, there can be silver linings and rainbows beyond the clouds for those who choose to see them. It may seem unfair that help is so unequally distributed in these times. It is certainly magnified in moments like this.
Yet, we all have a choice of which side we want to be on. Playing martyr and feeling sorry for ourselves doesn’t help anyone or enable us to help others. We can choose to serve and like many others before us, seize these moments to create sustainable multigenerational wealth and reliable incomes. Apartment building investing is one of the main ways to do this.
Some of the side effects we may see over the next year include:
- More universal income and government subsidized rents (at least temporarily)
- Distressed property sales, and right-priced commercial properties
- Value added opportunities to convert and optimize mixed-use buildings
- Soaring demand for rentals as owners lose homes and cannot buy
- Many individuals shifting portfolios out of the stock market
- Tech startups and traditional 401ks providing capital and competing to participate in projects and investments
We cannot control what happens to us. At least not completely on a viral level. We do get to decide how to react and control our futures. That greatly relies on the financial decisions being made right now.