IRA Financial’s Adam Bergman discusses the real estate trends he’s seeing due to the COVID-19 pandemic. These include people looking to move to less densely populated areas, while investors are looking at more urban areas, where deals can now be found.
Like other crises here in America and across the world, the COVID-19 pandemic affects everyone’s lives. This is especially true for the finances of the American citizens. Of course, the health of the people is of paramount importance, but the financial well-being must be considered too. Here at IRA Financial, we specialize in self-directed retirement plans. Real estate has always been the number one investment for our clients. In today’s podcast, we wanted to look at the real estate trends and see where investors are looking to put their money.
Residential Real Estate Trends
For obvious reasons, residential real estate is where most investors make their profits. This can be rental properties, fix and flips or with buy-and-hold properties and land. Everyone needs a place to live. However, due to the pandemic, many people are looking to get out of the major, urban centers around the country. The reason is twofold. Of course, the more densely populated an area is, the more likely the coronavirus will spread. It’s better to be safe than sorry, especially if you need to get out into the world frequently.
The second reason is a direct result of the mandates passed down by the government. Since many businesses have been forced to close, a lot more people are working from home. As Mr. Bergman can testify to, it hasn’t been a difficult transition. Once everyone is set up, working remotely is just as effective as working in an office. Of course, you need to be in the kind of industry where this possible.
Because of this, employees no longer need to be within driving distance of their job. Afterall, so long as you have an internet connection, it doesn’t matter if you live down the street or across the country. Obviously, the pandemic will not be around forever, but remote working may be. Office space brings a high cost to any business. Scaling back or completely eliminating the physical office space is very appealing to business owners. Savings can be passed down to employees and to improve the business. But what does this mean for real estate investors?
What Investors Are Looking For
In the podcast, Mr. Bergman cites some numbers from real estate trends he’s seeing. Among those, about one third of people polled are looking into moving. Many of these people are from urban areas, however, suburbanites are also considering a move. Investors will look to pick up properties in less densely populated areas around the country. Of course, they will be doing their due diligence to spot the bargains. This is especially true for areas “near” big cities. People still want to be close to the major markets like NYC, Chicago and the like, but they don’t need to be within 15-20 miles.
A prevailing thought is that people might look to rent for the time being. Once everything settles down, a vaccine is created, people will flock back to the cities. A lot of these Americans are professionals, used to high rent and mortgages. This may push up the value of homes further away. In addition, this can push up the price of rental properties.
What About Urban Areas?
As people flock out of urban areas of the country, what do you think that will do to the prices? Supply and demand dictates everything; the prices of real estate will drop as more inventory becomes available. As we mentioned, people will look to come back to these cities and will pay the rent they were used to paying. If you have the ability to pick up properties and hold them for awhile, now may be the time to start looking at these areas.
Of course, this will depend on how the country reopens and what the virus does. No one wants to pay high rent in a big city with nothing to do. The appeal of living in the city is the ability to enjoy all the amenities. If bars, restaurants and other shops are closed, people are left with nothing and probably won’t start coming back. This real estate trend is a long-term thing, so you need the capital to be able to buy and hold until the time is right.
Use Your Retirement Funds
It wouldn’t be a podcast if we didn’t mention retirement funds. The best way to take advantage of these real estate trends is to self-direct your retirement plan. Anyone can open and fund a Self-Directed IRA. Self-employed individuals can utilize a Solo 401(k), which is the best plan for real estate investing. Whichever plan you use, real estate investing should be a major part of it. As we all know, generally, it’s the best investment to have in your portfolio.
At IRA Financial, we can help facilitate your plan and get you investing in real estate in no time. Of course, we want to ensure the health and safety of all Americans. This includes the financial well-being of everyone. Investing in alternative assets, in conjunction with traditional ones, will help you achieve financial freedom in the future.
As always, thanks for listening! Be sure to check out all of our podcasts at our SoundCloud page. As Mr. Bergman mentioned, our all-new podcast, AdBits, is now live. Check out the premier episode here!