The year 2020 will be forever remembered as the year the world stopped. Most of us only dreamed of an event like this that would cripple the world seemingly overnight. Coming into the year the economy was booming, unemployment was at historic lows, and our economy appeared invincible. This all came to a screeching halt in a matter of 30 days. The year 2020 is now owned by COVID-19. Quickly, our entire world shifted from an economic view to the safety of public health. We learned phrases such as “social distancing” and watched giants close their doors. With all this happening so fast how would the real estate market react? Would we see a total collapse like that of 2007-2008? For sure, this started with a lot of uncertainty. However, this is not the first time our nation has had to overcome great adversity. Most likely this will not be the last either.
Real Estate is a unique asset class and rental property has held strong. Typically, when the public does not have economic confidence, the rental market booms…. Why is that? Because renting is like dating… Yes, there is an obligation and it will hurt to break up, but it does not have nearly the impact of a divorce (buying a home). This market shift puts investors in the driver’s seat. Everyone needs a home.
The other impact COVID-19 has had on the fundamentals of home shopping is location. Pre COVID as I like to say, many embraced desirable locations close to the city. Downtown areas that are close to office jobs, bars, clubs, sporting events, etc. came as premium as renters were willing to pay this price. Now with our newfound concept of “social distancing” these patterns have changed. Post COVID working environments may be forever changed with more and more companies allowing work from home options for their employees. The result of these changes are renters who are looking further out. This behavior change means increased demand for the same property. Vacancies have decreased and rent prices are increasing.
Lastly the question everyone has right now is how are residents paying their rent? While government stimulus has helped, the real answer for us has been having high quality residents. Having a comprehensive screening processes up front increases the chance of the resident paying when a curveball like COVID19 is thrown. In property management, we are ultimately people helping people. Sure, there are residents that were affected by this pandemic. We have kept the communication lines open and have assisted in every way we can to ensure rent is still paid. Both owners and residents appreciate the effort and concern.
So what are the key takeaways for real estate investors?
- Renters will desire more square footage in a location further away from major metro areas
- Demand is high with more renters looking at the same property. We have seen an 100% increase in the amount of inquires on our properties post COVID…
- Properties in the best condition will command the best prices – and will rent quicker
- Rent is still due… quality residents understand this and have proven to be effective in a time of uncertainty and adversity.
Rent It Network is the highest rated property management and investment services company in Florida. Let us know how we can assist you with your investment goals.