The COVID-19 crisis has created a world filled with uncertainty. From dwindling economies to businesses closing down permanently, it seems making big investment moves should be off the table for now. Even though the economy is in recovery, the uptick remains slow.
But there are a lot of benefits to investing in real estate, regardless of the state of the economy. For one, real estate investment tends to be less volatile than investing in the stock market. Real estate prices move at a slower pace because real estate is not liquid like stocks; real estate sells much slower and is much more challenging to transfer. Another benefit is that property investments can produce a stable income. Whether it’s residential or commercial, people and businesses will always have a demand for spaces to occupy. And lastly, property or real estate can surpass stocks and bonds. Real estate investment could prove to be the more lucrative option during economic downturns when stocks and bonds falter.
Here are some tips for the kind of real estate you should be investing in, in the time of COVID-19.
Residential real estate
These are the kind of homes you need to look out for when eyeing real estate prospects:
- Home designs that take into account the current crisis — Architects and design experts predict that the trend is moving towards design ideas that consider our new normal. For example, homes that use antibacterial materials such as woods, and metals like copper, bronzes, and brasses. Another example is a design that allows for separate spaces. Before the pandemic, an open floor space plan was the go-to for residential design, to enable families to use shared spaces, to have a vast area for entertaining guests, and for the site to evoke a sense of openness. In a world where social distancing is the norm and where family members have to isolate from time to time, a separate guest house suite or “casita” could be a good investment and can entice families to rent. Lastly, houses today also need to be a home-office-school-gym-play hybrid, so a residential property with enough space for all these activities could prove to be a wise investment. If these properties don’t exist yet, look for an affordable house and lot and consider flipping it. Turn it into a COVID-19 dream house for families looking for a refuge from the pandemic.
- Homes in the suburbs — Pre-COVID-19, the younger generation preferred living in cities. A 2019 study showed that adults aged 25 to 34 preferred urban living. However, new data shows that since the pandemic, people from dense places like New York and San Francisco have been looking into moving to the suburbs. And it’s no surprise; homes in the suburbs leave more room for social distancing, it’s a great place to raise children, and homes in the suburbs are especially good for people who work from home. Do your due diligence as well—check if the area is a good neighborhood with good job opportunities for potential tenants or buyers.
- Homes that make room for sustainability — Another home and lifestyle trend that will rise in light of the COVID-19 crisis is sustainability. Now more than ever, people are more conscious of their lifestyle choices. People are looking for homes where they can be self-sustaining, so a residential property with access to greenery is a smart place to invest. It should also be built in a way that respects resources, will last longer with quality systems, and must be able to optimize energy and water use.
Commercial real estate
Since most offices have transitioned to remote work, for the time being, investing in commercial real estate may not seem like a lucrative idea. But there are still ways for commercial real estate to be profitable in the time of a pandemic. Here are some ways commercial real estate can be a source of income in the time of a pandemic:
- Spaces that can serve as a warehouse — There may still be a demand for big warehouses, which can handle logistics for bigger corporations like Walmart and Amazon.
- Spaces that can function as self-storage — Self-storage facilities are generally considered an essential service. Data shows that even at the height of the 2008 recession, the self-storage industry proved to be recession-resistant.
- Spaces for multi-families — Having multiple families rent out your area can give you multiple streams of income. Even if one family leaves, it won’t have as big of an impact on your bottom line.
There are many unknown variables right now, but the fundamentals that inform the real estate industry remain the same—demographics, supply, and demand. Review your investment portfolio with your financial adviser, and keep your eyes peeled for opportunities and trends.