The Past Informs the Future: What We Learned from the Great Recession
“Those who don’t learn from history are doomed to repeat it.”
We’ve all heard that phrase. It’s most often used as a reminder to look back at past mistakes to avoid having those same issues arise. However, it’s also important to remember that looking back at the past can teach us much about how to deal with, and make the most of, our current situation.
Those who’ve been in the market for a while likely still have plenty of memories from the Great Recession. Those who are new to the market have likely heard the stories, but don’t have firsthand experience in dealing with the kind of issues that can arise during a recession, such as unemployment and less demand for housing associated with falling property prices. But regardless of your experience, taking a look at what the market taught us can be a great advantage when investing in real estate post-COVID-19.
The economic effects of the COVID-19 pandemic have been among the greatest we have seen in decades. Its effects can be seen as similar to those of a major natural disaster. Due to the record-breaking economic expansion that began at the end of the Great Recession, experts were already predicting another recession was inevitable, even before the outbreak of COVID-19. As was the case with the Great Recession, great numbers of people are now unemployed, and many businesses can expect to see reduced profits, even post-COVID-19.
The real estate market has already begun to see the effects. Due to unemployment, fewer people are currently interested in purchasing “big-ticket” items, such as homes. On top of that, we have begun to see issues with individuals being unable to pay rent. Similarly, the housing market began to shrink prior to the Great Recession, due in large part to rising home prices people could not afford.
What will the Real Estate Market Look Like Post-COVID-19?
While we are not exactly experiencing the same as the conditions that led to the Great Recession of 2008-2010, those who have knowledge of real estate investing during a recession are going to be far more likely to succeed in the market right now. There are three key things to take into account that can lead you to success, even if the market does falter in light of the pandemic currently affecting the global economy.
- Cash is King
These days, people tend to think less about the cash they have in pocket and more about what they can do with credit or what they can accomplish with borrowed money. However, right now is a good time to get as much cash as you can so when (and if) prices go down you can begin to purchase properties. Cash is and will always be king, regardless of what some of the leading experts say, precisely because of situations such as this post-COVID opportunity for real estate investors.
- Get Rid of Property Now
Do you think property prices are going to start going down? It’s a safe bet that they might. If so, then now could be a good time to begin getting rid of some of your properties. While you may not want to sell off all of your property, those that likely won’t hold enough value to be worth holding onto are going to be worth selling off now, while you can still make a good profit off of them. Real estate post-COVID-19 is likely to be a more challenging market, so it is important to make wiser decisions about the properties you are holding onto right now. Which brings us to our last point:
- Take a Look At Your Investments
Where are your current investments? And what kind of investments are they? As already mentioned, unemployment levels are likely going to be high in the coming months and even in the coming years following COVID-19. This is why it is important to look at real estate investing during a recession and where your real estate is located. Property located in a good neighborhood where the majority of individuals still have work and a steady income and therefore are still able to continue making payments is a far better investment than having property in a blue-collar neighborhood where individuals are out of work.
Bay Mountain Capital has been there through it all and will continue to be there to help, offering a post-COVID opportunity for real estate investors to innovate and get the assistance they need. If you’re looking to get started on your next fix and flip, reach out to BMC and apply today. There is still no better time than now!
About Bay Mountain Capital:
Bay Mountain Capital has been in business for more than a decade, closing approximately 2,000 loans. We specialize in financing all types of residential and commercial property investments throughout Texas and Georgia. Using common sense and value-added approach, we strive to incorporate these principles into our underwriting and closing processes.
As a direct lender, Bay Mountain Capital can close a loan within one day after receiving a complete file and clear title. The process generally takes two weeks for a residential loan but can be accelerated where circumstances require it.
We are primarily an asset-based lender, which means that qualification requirements are limited. Our rates and fees are among the lowest in the industry.