Do you have a post COVID game plan for your commercial real estate investing? If not, then you need to get one! In this Part 1, learn how the coronavirus has impacted one major aspect of commercial real estate and discover my 3 step game plan to successfully navigating the changes wrought by COVID:
3 Post COVID Housing Facts in the United States
Fact # 1: More than two million people are ninety days past due on their home mortgage. Many are in forbearance (and those forbearance may continue to be extended) and there currently is a foreclosure moratorium for some home loans. But what will happen once the moratorium ends?
Fact # 2: Out of one hundred million renters, thirty to forty million of them are at risk for eviction. Similar to foreclosures, we have an eviction moratorium right now, but what will happen in 2021 when it ends?
Fact # 3: There is a severe housing shortage of approximately 2.5 million housing units and Home builders continue to fall behind on keeping pace with demand. It may be a very long time before they can catch up.
Effect on Commercial Real Estate
These three factors will put enormous pressure on the apartment business resulting in a dramatic increase in demand for apartments.
- People whose homes go into foreclosure will move into apartments because it’s their only option due to bad credit.
- Renters will either move home or rent another apartment.
- Since we are not even close to satisfying the current housing shortage, the market won’t be able to meet the demand for young people moving out on their own.
What happens when there’s increased demand? Apartment rents go up and as rents rise, apartment property values also go up. We believe over the next 18 months to 2 years, those already invested in apartments or those about to invest are going to do extremely well.
3 Step Post COVID Game Plan
How do you prepare for all this? Abe Lincoln famously said, “Give me six hours to chop down a tree and I'll spend the first four hours sharpening my ax.”
In other words, preparation is the key. How do you sharpen your ax?
Step #1: Study
Become a student of the apartment investing. If you have money to invest, don't put that money to work investing in apartments until you get educated. To do otherwise would be irresponsible. You can begin that education by watching my video called How to Buy Your First Multi-Family Apartment Building. This teaching will introduce you to concepts like how to find apartments and how to evaluate them.
Step #2: Learn How to Get Financed
Learning how to get financed is critical when purchasing an apartment building. There are primarily two ways to finance commercial real estate:
- Through a conventional loan: You can watch my video Apartment Loans 101 to learn the fundamentals of apartment conventional loans and how they differ from residential loans.
- Using creative financing: In my teaching called Buying Commercial Real Estate Without Bank Loans, you'll learn about creative financing techniques such as master leases, seller financing and installment sales.
Step #3: Get help!
Don't try to do this by yourself. Consider applying for my Protege Program