Where do we go from here? Are you itching for some post-pandemic real estate investing?
The pandemic created significant economic distress overall, nationwide and globally.
Coming to the rescue, the federal government decided to print somewhere in excess of $20 trillion. This $20 trillion papered over some of this distress but somehow kept the music playing. They were anticipating that there was going to be a lot more distress, but then it just kind of didn’t happen. This national debt will play a huge part in what to expect in future real estate investing, so where do we go from here?
The market is not as distressed as once feared.
So now there’s a lot of money floating around and investors are waiting to pounce on deals. With that amount of money, I don’t see that there’s going to be a whole lot of significant distress in the market. What we’re seeing now is people with assets who thought they were in trouble got the reprieve, and now they’re starting to come back out onto the market again as there are opportunities for closing the deal.
My call for 2022.
There’s going to be a real opportunity to be selective. Buy some assets! Buy hotels or buy retail buildings. Multifamily and industrial are typically the “darlings” of the real estate world and even though they didn’t see much impact through the pandemic, for me, the fact that everybody’s jumping in on multifamily and piling in on industrial makes it less appealing because those are the people who are willing to take lower profit margins. For us, the way we look at things, in general, is by a price discount to the actual intrinsic value.
The future is brighter!
There are going to be some repositioning opportunities. We may have the roaring twenties and a hundred years later, an even greater recession coming down the pipeline. But as of right now, it seems like anything that is a solid asset is positioned to be somewhat favorable, as long as you can pay your debt service and transition from that time period.
As I said before, the pandemic triggered a lot of liquidity and I believe it’s actually going to prime the inflation growth of solid assets and to round that out, I think it also triggered low-interest rates for a prolonged period. Two years ago, I had bigger concerns that interest rates were going to go up 5%, 6%, 7% so that they could curb down these inflationary pressures. Well now, with the $20 trillion printed and having to pay that back at the interest rates that they control, they’re not going to necessarily raise interest rates.
Want to learn how to take advantage of these real estate opportunities? Check out my book Catching Knives: A Guide to Distressed Commercial Real Estate.
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